David DeVoe, who spearheaded Schwab Advisor Services' mergers and strategy consulting business for RIAs, has left the big brokerage to start DeVoe & Company, a consulting firm that will offer consulting services on M&A, valuation and succession planning for the RIA market.
DeVoe said he had considered launching his own firm for several years but started thinking more seriously about it six months ago. "It's a hyper-fragmented space with 16,000 RIA firms, and the industry is going through" a natural consolidation phase, DeVoe said. "We've seen mergers and acquisitions increase fairly steadily over the last eight years and I expect that will continue over the next seven to ten years."
DeVoe notes that only a handful of consulting/investment banking firms serve the RIA business and have plans to focus on what might be called the middle market, or firms with more than $100 million and less than $2 billion in assets under management. Having watched more than 300 deals from his perch at Schwab, DeVoe believes he can help future clients make the acquisition process more efficient. Since only one in eight merger discussions ends up being consummated in a transaction, he says it's imperative to save time by cutting to the chase.
This positions DeVoe & Company in a space where a large number of firms are clustered, firms that are somewhat bigger than those served by FP Transitions. At the same time, DeVoe is unlikely to be competing against M&A advisors like Berkshire Capital, Silver Lane and Cambridge International Partners that work with RIAs, asset management firms and family offices with more than $2 billion in assets under management. Frequently, their advisory fees can reach well into six-figures or higher.
Currently, DeVoe is working with one client, an RIA with $1.5 billion in assets under management. That firm is looking at possibly making two strategic acquisitions of firms with less than $250 million in assets. One potential acquiree could provide the acquirer with internal investment management capabilities while the other could provide an entrée to the hybrid dual-licensed space.
DeVoe says he eventually wants to crate a scalable solution for smaller advisors.
Schwab Advisor Services says Nick Georgis, a vice president who heads the company's practice management and strategic business development group, will replace DeVoe in the near term.
"We will be recruiting for this position, says Schwab spokeswoman Susan Foreman.