Edelman Financial Services (EFS) announced today that private equity firm Hellman & Friedman (H&F) has acquired a majority interest in the Fairfax, Va.-based independent financial planning firm. Both Edelman Financial’s senior management and Lee Equity Partners, which took EFS private in 2012 for $257 million, will retain significant equity stakes.
Founder Ric Edelman will remain the firm’s largest individual shareholder. In a prepared statement, the firm reiterated that it is continuing its search for a new CEO so that Edelman himself can focus on expanding the firm’s "educational activities, breadth of client services and geographic footprint." The statement adds the deal with H&F will facilitate that search.
No terms financial terms were disclosed. However, the transaction will undoubtedly value EFS at a much higher price than the $257 million that Lee Equity paid three years ago. Today, the firm has about $15 billion in assets under management and 28,000 clients in 41 offices. Three years ago, it had about $8 billion.
EFS focuses on serving middle-America clients. Its average client has about $550,000 in assets. Many analysts believe that market to be the most underserved and profitable investor group, as big Wall Street firms and independent RIAs battle for clients with more than $1 million.
H&F is no stranger to investing in the independent financial advisory business. In 2005, the firm, along with Texas Pacific Group, acquired control of LPL Financial, the nation’s largest independent broker-dealer, for more than $2 billion. In 2011, LPL went public.
H&F “will help us better serve our clients and continue to grow to serve more hard-working Americans than ever,” Edelman said.