What began five years ago with a discussion over wine in a Perth, Australia bar culminated with Wednesday's announcement that Savant Capital Management and The Monitor Group (TMG) have joined forces to create an RIA firm with about 2,700 clients and $2.7 in assets. The combined company has 90 employees working in 10 offices across four states.
The new entity, Savant Capital LLC, kept the Savant name because it has a stronger brand identity, say executives from both companies. The firm will be headquartered at the former Savant Capital Management's main office in Rockford, Ill. Before the deal, Savant had eight offices in Illinois and Wisconsin. For its part, McLean, Va.-based TMG had two offices, including one in Florida.
The new Savant combines TMG's strengths in estate planning and tax preparation with Savant Capital Management's divisions that serve a range of clients from very high-net-worth individuals to people with as little as $50,000 in assets. It also has an institutional side that provides advisory services to 401(k) and company retirement plans, endowments and foundations, as well as a private trust company. "The combination that we bring rounds out the stable," says Thomas Muldowney, who was Savant Capital Management's chairman and will be chairman of the new company's board of managers.
Both firms have a wall full of "best of industry" accolades, and they say they were doing quite well on their own. But they saw the chance to do something more both for their firms and for the industry.
"We see many advisory firms where people are bailing and being bought out by aggregators, and it's just not working because all they've [the sellers] done is get some cash and everybody is left behind stuck in 'park,'" says Glenn Kautt, 64, who is TMG's president, chairman and chief investment officer. He'll serve as vice-chairman of the new firm's board of managers.
"That's not what we wanted to do," he adds. "When we got together in Perth, we talked about how we can change the world. We wanted to create something that was so powerful and enduring that it transcends what we see as the prototypical RIA model."
Both Savant and TMG are members of the Zero Alpha Group (ZAG), an international network of independent investment advisory firms that includes members in Australia and New Zealand. It was during a libation break during a ZAG meeting in Perth in 2007 that Kautt and Savant Capital Management CEO Brent Brodeski speculated about how to change the industry.
"It wasn't about getting bigger, but about getting better and how could we effect this change," Kautt recalls. "About a year ago, I approached Brent and Tom [Muldowney,] in Chicago at another ZAG meeting. I asked them if they'd be interested in continuing the conversation, and they said yes, and here we are a year later."
Executives from both firms say the creation of Savant Capital LLC is a case of both companies taking their assets and putting them into a new company. "There was no cash involved, it's an all-in deal," Kautt says.
"We needed to value each business, of course," says Brodeski, 44, who will be CEO of the board of managers. "But what happened is that the pie just got bigger and we're splitting it with the people formerly known as The Monitor Group. We have more scale and a national footprint. There are certain levels of expertise that each group has that the other doesn't. We now have more relationships and intellectual capital. At the end of the day, the litmus test we laid out is this must be the best move for our clients, our respective teams and the communities we serve. And we got bright green lights for each of those criteria."