M&A
Perhaps the quickest––but not always the easiest––way to grow an RIA is through mergers and acquisitions. The number of M&A deals among RIAs jumped 20% in 2013 versus the prior year, according to Schwab Advisory Services. The largest share of the 54 transactions were RIAs buying other RIAs (44%), and RIA-on-RIA deals tend to be smaller and often take the form of tuck-in acquisitions that help firms expand their capabilities and footprint.



Bridgewater Wealth & Financial Management in Bethesda, Md., did a meaningful transaction when it added former Maryland Capital Management president Stephen Schuler to the fold as principal and chief investment officer.

Schuler’s arrival bolstered Bridgewater’s research chops and brought over more than $200 million in client assets, expanding the firm’s AUM to roughly $470 million. Bridgewater is a partner firm with Focus Financial Partners LLC, a network of independent wealth management firms. Focus served as matchmaker between Schuler and Bridgewater.

“Focus Financial made the introduction to Steve for us,” says Kim Allred, Bridgewater’s chief of investment operations. “We thought it was a good fit.”

Down in New Bern, N.C., D.L. Blain & Co. sought to expand its business, and it worked with FP Transitions to buy another practice. They found a firm that was both bigger and located on the other side of the continent. “My first choice was to find something in the Southeast,” says David Blain, president of his namesake company. “I came across this firm and thought, ‘What do I have to lose?’”



The two principals at the target firm, Pleasanton Financial Advisors in Pleasanton, Calif., planned to retire and wanted to sell their business to someone who wanted both the clients and the company’s existing staff. Blain liked the notion of diversifying his client base while onboarding a seasoned staff who could maintain their existing relationships with those clients. “It was a perfect scenario for me,” Blain says.

A deal was struck, and with the stroke of a pen the company ballooned in size roughly twofold, and it ended the year with assets of $220 million, a 230% rise. The deal enables it to consolidate administrative and operational functions and to deploy new technology. For now, the company is a two-headed entity operating under the two firms’ existing banners, but will soon unite under the company name of BlueSky Wealth Advisors.

Blain says he’s pleased with his purchase but would do some things differently the next time. And he foresees there will be another acquisition down the road after he’s done digesting this deal. “We’ve learned some lessons to where next time it would be more efficient,” he says.