When brothers Nick and Tyler Kolbenschlag started their Charlotte, N.C., registered investment advisor firm, Crown Wealth Group, in the spring of 2018, the millennials had a very specific business model in mind and aspirations for growth. Meanwhile, Doug Coppola was going strong 40 years into his investment career, including the past 10 years running his own RIA (with plenty of assistance from his wife, Mary Jo) at Client First Advisors in Chapel Hill, N.C.
Last February, Coppola says he got a letter—and a follow-up phone call—from Crown Wealth Group asking if he wanted to sell his business to them. He said he wasn’t interested in selling because he still loves his job. But they hit it off on the phone and Coppola decided to meet them. One thing led to another and last month the two companies agreed to merge in order to achieve two goals: It doubled the size of Crown Wealth and is the firm’s first major step in its growth plans, and it provides succession planning for Coppola.
“We’re calling it a merger, but it’s a delayed acquisition,” says Nick Kolbenschlag, who’s 33 years old. “We offered him a term sheet to buy him out at current market value. It would’ve been a normal buyout with a down payment and then a three-year payout, and he’d be required to be here only 12 to 24 months and then it was up to him.”
But Coppola, 67, wasn’t ready to call it a career. “I made it clear I’d listen to what they had to say but I wasn’t ready to sell,” he says.
Crown Wealth and Coppola ultimately created a 60-month contract where if Coppola wants to sell his business within the next five years he has to give Crown Wealth notice and within six months they will close on the acquisition of his business based on the valuation at the time of that transaction.
“For the first two years, he has a guaranteed multiple based on the multiple of what we believe the business is worth today,” Kolbenschlag says. “In years three through five it would be variable based on how his book is structured at that time. It could improve; it could decline. The risk is on his end in that it will become market value again.”
This arrangement, Kolbenschlag explains, gives Coppola flexibility in taking control of his retirement so he can do it anytime between now and month 60 of the contract. If he goes the whole five years, at month 60 the closing happens on the purchase of his clients.
“Between now and then we’ll help him grow his business,” Kolbenschlag says. “Doug does only traditional money management right now, and we’ll help him do more of the planning aspects. We offer real estate, we have insurance, we do group benefits and financial planning, so there are all of these untapped services he could offer his clients.”
Nick and his 28-year-old brother, Tyler, have followed similar arcs on the road to creating Crown Wealth. Both majored in finance at North Carolina State, and both worked for an RIA in Raleigh before moving to Charlotte together to work at GCG Wealth Management, an affiliate of Questar Asset Management, the RIA side of the hybrid broker-dealer/RIA firm that also included Questar Capital.
At GCG, Nick was director of the personal CFO services division, and Tyler was the division’s operations guy and led the firm’s advisor acquisition strategy. They became friends with Steve Lindgren, 36, a regional vice president at Questar Capital.