United Capital Financial Advisers recently closed two acquisitions and expects to close at least four other deals by year-end, as the national financial advisory network sees increased interest from smaller advisors re-evaluating their options during the current financial turmoil.
Based in Newport Beach, Calif., United Capital is a holding company that buys advisory firms and seeks to transform their business models by taking over all back office and support chores, converting them to predominantly fee-based services, and standardizing operations.
In August, the company finalized a deal for Integrated Financial Management, a Northbrook, Ill.-based firm with assets of roughly $150 million that was founded by Wheeler Chapman III. In September, it closed a deal for Trevethan Capital Partners, an outfit with $500 million AUM that was formerly Oppenheimer & Co.'s largest advisory group in San Francisco.
Managing director Kelly Trevethan had informal talks about joining United Capital long before he came on board, and says he was always impressed with its system and platform. But he held off making the leap over concerns about how clients would react if he left a large, nationally recognized company for a relatively unknown independent outfit. Recent troubles on Wall Street that tarnished the brand names of major financial services companies put that argument to rest.
"In light of the meltdown of the traditional brokerage business," Trevethan says, "I wanted to stay on the forefront in providing the best solutions for our clients."
United Capital CEO Joe Duran says the company has agreements to acquire firms in Chicago, Houston, Tampa and La Jolla, Calif. "We've signed purchase agreements and their clients are literally signing the paperwork to transfer their assets," he says.
All of the deals are expected to close by year-end, and would give United Capital 20 offices and more than $10 billion in assets. And Duran sees a lot more deals on the horizon. "This is probably the busiest time we've had both with independent RIAs and within the brokerage environment," he says. "The lift-out opportunities are much bigger than they've ever been."
Founded in 2005, United Capital's strategy is to expand aggressively, build a large national network of affiliated advisors, and have a big liquidity event by 2011. It typically seeks to buy advisors with between $100 million to $500 million in assets. But last October it broke the mold when it acquired PFE Group, a Massachusetts-based 401(k) and pension advisory business with $6 billion in assets.
Duran says United Capital has recently had multiple discussions with large wirehouse teams, and is in talks with one large firm that could add "billions of dollars" in assets. As for the company's hoped-for liquidity event in three years, Duran realizes United Capital is dependent on the health of the public markets. But he said the company is ahead of its game plan from a financial performance perspective.
"We're having an incredible opportunity to grow our revenue like never before," Duran says.