Rockford, Ill.-based Savant Wealth Management, an RIA firm with $13 billion in assets under management and advisement, said yesterday that it had acquired Alliant Wealth Advisors, a Manassas, Va.-based RIA firm with about $262 million in AUM.
The deal closed June 30, according to a Savant press release, which added that it’s the firm’s first RIA acquisition this year and its 12th acquisition overall.
Alliant has offices in Manassas and Reston, Va. John Frisch, the president of Alliant, will become a member-owner of Savant, as will Alliant senior advisor Jeff Schatz. The firm comes along with 155 wealth clients and eight staff members.
Brent Brodeski, the founder and CEO of Savant, said in an interview with Financial Advisor that Alliant attracted Savant for a number of reasons, one of which is that Savant already has about $1 billion in managed assets in the Virginia-Washington, D.C., area. This is the firm’s third deal there in the past 10 years, and it gives Savant the ability to expand.
“We’re already in Virginia. It’s a great market. … We’ve learned that being larger in a given market is better than being small in a lot of markets. Being able to have more feet on the ground and greater density helps accelerate growth. The bigger firms tend to get more of the at-bats.”
Alliant has also developed a sophisticated checklist technology for identifying key planning opportunities, and Brodeski wants to expand it to a firm of Savant’s size.
“We view that there’s 10 key areas of planning, but underneath those there might be 120 different tax strategies and a whole slew of estate planning strategies,” he said. “Some might not be life-saving, but picking up every nickel, quarter, dime and silver dollar matters. … [Alliant has] embedded it in a technology solution they are able to use.”
Alliant also has a business in the 401(k) plan market serving physicians, as Savant does, which allows both firms to serve doctors as both individuals and plan participants. “Their approach is almost a carbon copy of how we do things,” Brodeski said. “It’s a further density play within the retirement plan division. They work with a lot of physicians and a lot of professionals as well, just like we do. … It’s hard to find seasoned retirement plan talent. They’ve got it.”
Late last year, Savant took on help from a private equity partner, Kelso & Company, which bought a 20% stake in Savant. One of the advantages was that the firm got $15 million to go on a buying spree. In June, the firm bought a $3 million stake in Australian fintech firm Lumiant, whose platform engages clients using their goals and values as a starting point to their planning. Savant said the Alliant deal was part of Savant’s five-year growth plan, which includes both organic growth and acquisitions.
The firm is also looking to hire a new head of M&A as part of its expansion.
When Kelso purchased its stake, Brodeski said, it valued Savant at a multiple comparable to the highest ones in the M&A space. He didn’t give his own firm's valuation valuation, but the most famous ones are at double-digit multiples to EBITDA, sometimes as high as 20 times.
Brodeski did say that Kelson's high valaution allowed Savant to buy other firms at higher multiples as well, and that's made the firm more power in a hyper-competitive acquisition arena.
“Multiples have gotten pretty frothy,” he said. With the Kelso deal, he added, “We benefited from a very high multiple transaction, which essentially allows us now to use our equity to partner with others. We can pay more to new partners because our currency, our equity, is likewise valued higher. Also, when we did the Kelso deal, we had--myself and many of the other members--a lot of debt from our prior recapitalization that we were able to pay down. So that has also put us in a place where, since we have almost no debt on the business, we can borrow inexpensive debt capital, combine that with allowing Alliant to roll equity into the firm.
“We’re paying quite a bit more than we would have paid for the same business just a year ago. It’s roughly a 50% premium to how I would have priced a partnership pre-Kelso.”
Savant is an integrator rather than aggregator, he says, and firms that come on board are generally required to do business the way Savant does.