Some 20 years ago, advisor Greg Friedman wanted to create client relationship management software for his planning firm. He hadn’t planned to make it commercially available to other planners, and had no idea it would become the basis of a new business.

The name of that software was Junxure. And the demand for it soared, eventually leading Friedman to provide it to 1,400 advisory firms through a company he co-founded in 2001 and sold on December 31, 2017, for a handsome $16 million. (That number comes from WisdomTree Investments, which funded Junxure’s purchase by AdvisorEngine Inc.)

After he sold his baby, Friedman found himself with money and expansive ideas. He began building out his RIA, Private Ocean LLC, immediately afterward with two acquisitions in 2018. They boosted his firm’s number of offices to four, expanded its roster of principals by essentially 50%, and grew managed assets $1 billion, nearly doubling the $1.2 billion it had.

“We’re trying to get to a size and scale that provides the economics to add client services, to create opportunities for employees, and to provide internal opportunities for ownership and succession,” says Friedman, a recipient of several industry awards (many for Junxure) with numerous mentions on top-planner lists.

His hunt for new acquisition targets is ongoing. But buying firms and building scale is about knowing how to merge cultures. Private Ocean’s two 2018 deals show how different those deals can be.

A Tale Of Two Mergers: Mosaic

Friedman’s acquisition philosophy requires a certain time commitment, and he is convinced of a few things about mergers and acquisitions in the advisory space.

One is that no matter how much due diligence is devoted to crunching a deal’s numbers, it’s important to allocate even more time to “the qualitative aspects of the business—the people, the culture. These are much harder things to assess,” he says. “You don’t read them off spreadsheets. You don’t get them from data.

“You’re buying a service business that ultimately is tied to people,” Friedman says. “It’s clients tied to their advisor. If the advisor gets uncomfortable after a deal and goes somewhere else, then a lot of their clients potentially go somewhere else, too.”

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