Of course, some sellers disagree with Barton’s computations. “But more times than not, I’m spot on because we’re arriving at those adjustments together,” he notes. “So if I’m off, I’m not off more than 10% plus or minus, so the adjustments are on the margin.”

Most of Mercer Advisors’ acquistions are all-cash deals, though some acquired RIAs roll a portion of the purchase consideration into Mercer stock. “We buy 100% of the stock or assets of the seller,” Barton says. “The seller doesn’t maintain a minority interest outside of owning Mercer stock.”

Exit Strategy
Mercer Advisors recapitalized in 2019 when private equity firm Oak Hill Capital bought a stake in the company from then-current private equity owners Genstar Capital and Lovell Minnick. Lovell Minnick cashed out its stake. Genstar remained on board after it sold out of its previous position and reinvested in Mercer Advisors from a new fund.

“For us, re-underwriting the Mercer team and platform, and restarting that clock to be a new five- to 10-year partner, gives us new capital to invest behind the company,” says Tony Salewski, managing director with Genstar Capital.

Oak Hill Capital managing partner Steven Puccinelli says his firm bought in because it believes Mercer Advisors is a well-managed platform that’s positioned to grow substantially as a consolidator of smaller fiduciary wealth management firms.

He adds Oak Hill was glad to have Genstar remain on board given its track record with Mercer. “We share the governance equally with Genstar,” Puccinelli says. “Since our involvement, we’ve hired a new head of human resources and a new CFO. We’ve added two independent directors who we believe will help us drive the business.”

Welling says Genstar and Oak Hill have equal, non-majority shares, with the remainder of the company owned by management and employees. He notes the company last year increased the percentage of employee ownership in a variety of ways.

As for Mercer Advisors’ ultimate exit strategy, Welling says all options are on the table. But for now, private equity ownership provides the capital needed for sustainable growth.

“I think companies lose their way when they set the destination of an IPO as their answer,” Welling states. “That’s not our goal. If an IPO is the best tactic to achieve liquidity and support the business, then we’ll evaluate that at the appropriate time. Our goal is much bigger than that, and its underpinning is the ability to serve our clients.” 

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