Back in 2009 Miles of Kingfisher argued that both the private-equity investors and the advisors in these transactions are focused on different numbers, both of which are wrong. The acquirers in the private equity world frequently are overly concerned with monetizing their investments quickly, viewing an IPO as the logical exit strategy. Advisors, on the other hand, are fixated on the upfront payment. All too often, they overlook what the terms and legal requirements of the contracts they are signing mean for their firms and clients.
None of the current consolidators has managed to do an IPO. Sources say Focus has circulated preliminary S-1 documents and might always try again if the markets remain hot. But yesterday, Focus announced that it done another round of financing with KKR and Stone Point. The tranaction reportedly values the big consolidator at $2 billion but an IPO is still elusive.
Edelman became public through its merger with Sanders Morris Mundy and went private with Lee Equity in 2013 after finding that its stock traded by appointment.
What’s clear is that while the private market for RIA firms is more active than ever, the public IPO market is focused on the next Facebook or Snap, not a bunch of advisors in their 50s and 60s. That’s not likely to change.