In November 2021, the voracious RIA consolidator Mercer Global Advisors boasted that it had bought fast-growing Atlanta firm ACG Wealth with $1.3 billion in AUM. The deal was led by Mercer’s high-profile dealmaker, Dave Barton, and brought aboard two ACG founders and 17 employees. The 19-year-old ACG’s creators said they needed the architecture and back-office support that Mercer was famous for bestowing on the firms in its stable.
Two years later the deal seems to have gone sour. Mercer has filed a lawsuit in federal court in Colorado against ACG and its founders in a contract dispute. However, the complaint is sealed, the details murky.
What’s known is that the lawsuit names ACG, as well as founders Jeffrey Shaver and Joseph “Jody” Young, who are no longer with Mercer, according to a receptionist at the company’s Atlanta office. Another executive named in the complaint, David Millican, is the head of Arkadios Capital, the independent-broker-dealer linked to ACG.
The lawsuit was filed in the U.S. District Court for the District of Colorado. Though he couldn’t offer details, a Mercer spokesperson intimated in a company response that the ACG team had violated their sales agreement.
“We do not comment on details of litigation,” said the spokesperson. “Mercer Advisors rightfully defends itself against violations of agreements, responsibilities, and codes of conduct that parties have willingly accepted as part of their employment or other transactions with the company.”
Mercer wouldn’t comment further on the substance of the complaint.
The suit was filed on October 20. Seven days later, Mercer filed another civil action against ACG senior advisor Kevin L. Rainwater, this time in U.S. District Court for the Northern District of Georgia Atlanta Division. It’s not clear if the suits are related. Mercer is seeking damages and injunctive relief against Rainwater, who Mercer said resigned in August of this year and took client lists and other proprietary information from the company in violation of his employment and confidentiality agreements.
Another ACG veteran, Frank Tamplin, was reportedly sued by Mercer for similar reasons earlier this year in a Georgia state court. He is now at Cambridge Investment Research.
“Mercer takes substantial steps to protect this high-value Mercer confidential information regarding its existing and prospective clients,” the company said in its suit against Rainwater. “These steps include entering into strict confidentiality agreements with its employees. … In addition, Mercer maintains the database that stores its confidential client information protected with a password and login requirement so that only authorized Mercer employees can access the information. Mercer limits each wealth advisor’s access to client information to only that information relating to clients that the wealth advisor is responsible for servicing. The hard drives of all Mercer-issued laptops are encrypted, and each employee’s Mercer-issued laptop and other electronic devices must be password protected before Mercer’s confidential information can be stored on them.”
Mercer has $52 billion in assets and has acquired advisories since launching its M&A initiative in 2016.
The Denver-headquartered firm is known as an integrator and the firms it acquires are asked to dissolve their brands and melt into the identity of the mother ship. In an interview with Financial Advisor in 2020, Barton said, “Integration is difficult. … We’re an integrator, not an aggregator. So our model is all about change; it’s an exercise in change management.”
As Mercer said in its complaint against Rainwater, the company’s “decision whether to acquire [a firm] is based on each target firm’s pro forma profitability, which is highly dependent on the target firm’s AUM and revenue retained after closing. These figures, in turn, form the basis of each acquisition’s carefully negotiated purchase price. As such, any post-closing reduction of revenue caused by the loss of one or more clients results in a much greater reduction in profit realized from the acquisition, and Mercer, as a result, takes a significant loss on the benefit of the carefully negotiated bargain.”
ACG was founded in 2002 and was formerly known as Atlanta Capital Group. The group described itself in marketing materials as a boutique serving wealthy individuals, foundations and retirement plans.
In 2017, the firm and its founders were tangled in another legal dispute as they tried to cut ties with their former broker-dealer, Triad Advisors and forge their own IBD, Arkadios Capital, led by ACG founding partner Millican. Triad claimed that the firm’s partners had borrowed money for expansions and signed restrictive covenants for a certain number of years in return for financing via a promissory note. According to a receptionist at Mercer in Atlanta, Millican never joined Mercer.
Shaver and Millican did not return calls seeking comment.