Aspiriant, a wealth management firm based in Los Angeles, has doubled its size since its founding in 2008, by acquiring $6 billion in assets through five mergers.
The firm, with $12 billion in AUM, is a prime example of the inorganic growth achieved by those who can manage a successful merger or acquisition.
PFI (Pure Financial Independence) Advisors, a consulting and service firm for RIAs, also based in Los Angeles, says for an advisory firm to be successful at aquisitions like Aspiriant and others, it must implement certain strategies. In a report, “Becoming a Professional Buyer -- Harnessing RIA M&A Strategies for Growth,” PFI lays out some of the ground rules it has developed for successful acquisitions.
In Aspiriant’s case, CEO Rob Francais said, “We don’t think of these as acquisitions at all. We really consider these integrations as ‘fold ins,’ and we approach all opportunities as cashless mergers.”
Francais would like to see the day in the not too distant future when Aspiriant has 100,000 employees and $1 trillion AUM.
“We offer a values-based pitch [to companies we want to acquire], not a financial pitch, and that has made all of the difference in attracting partners that are a cultural fit and are durable,” he says.
Beacon Pointe Wealth Advisors, based in Newport Beach, Calif., has had similar success with acquiring other firms, adding $3 billion in AUM through 11 transactions to grow its firm to $7.7 billion in AUM. As a serial acquirer, Beacon Pointe focuses on the benefits for incoming advisors.
The acquisition model appeals to the next generation of advisors and to advisors who want to grow their practices, said Matt Cooper, founding partner and president. Several industry trends are behind the increases in acquisitions and mergers, such as the fact that advisors are aging, clients expect more services, margin compression is continuing, and the complexity of doing business is increasing.
To become a successful acquirer a firm needs to have an easily communicable message about the firm and about its strategic direction, up-to-date technology, and an exceptional operating structure to showcase to the selling firm, said PFI.
In addition, having multiple owners with specific management responsibilities provides leverage and expertise so that selling firms know their clients will be well served.