Advisory M&A

Savant Wealth adds retirement services with Capital Directions deal; PE firms CD&R and Stone Point acquire Focus Financial in deal valued at $7B; DeVoe says RIA M&A on track for first decline in a decade; and more.

Savant Wealth Adds Retirement Services with Capital Directions Buy

Registered investment advisory Savant Wealth Management has added retirement services, including fiduciary governance and plan investing, with the acquisition of Atlanta-based Capital Directions.

The acquisition marks the largest deal in Savant’s history and expands its presence in the Southeast with Capital Directions’ $3.3 billion in assets under management and 25 employees. The deal brings Savant’s total AUM to $18 billion and expands its footprint to 10 states and 26 offices.

In addition to the retirement business, Savant is also acquiring Capital Directions’ turnkey asset management platform that includes outsourced CIO and portfolio management capabilities, back-office administration and client prospecting support.

“Capital Directions presented us with a unique opportunity to not only to serve traditional wealth management clients, but also to help other financial advisory firms and CPA firms offer best-in-class services to their clients, supporting our vision of improving a million lives,” Brent Brodeski, Savant’s CEO, said in a statement. “We will also benefit from Capital Directions’ Retirement Plan Services program, which will help strengthen Savant’s differentiated offering in that area.”

Capital Directions’ ownership team, including Covington, Managing Director Terry Hartigan, CIO John McMillen and Director of Financial Planning Richard O’Donnell, will each become significant equity owners in Savant, along with Relationship Manager Michael Bork and Wealth Advisor Miriam Falaki, according to Savant. Savant did not disclose details of their equity stakes or overall terms of the deal.

PE Firms Clayton, Dubilier & Rice and Stone Point to Buy Focus Financial Partners

Private equity firms Clayton, Dubilier & Rice LLC and Stone Point Capital LLC announced an agreement to buy wealth manager Focus Financial Partners Inc. in an all-cash transaction valued at more than $7 billion.

The proposed transaction will give Focus Financial stockholders $53 in cash per share, representing a 36% premium to Focus’ 60-day volume weighted average price as of market close on February 1, according to the firms. That is a 48% premium to the closing price of Focus’ class A common stock on December 28, 2022, the day the firms authorized their financial advisers to contact other specified potential bidders regarding interest in a potential transaction.

Funds managed by Stone Point have agreed to retain a portion of their investment in Focus and provide new equity financing as part of the proposed transaction, according to the firms.

According to the announcement, factors that went into the decision included Focus’ targeted acquisition strategy of other wealth managers focused on serving high- and ultra-high-net-worth clients, its partnership model and its global reach through international partner firms.

“Focus represents an outstanding collection of leading RIAs and business managers, and our investment is predicated on having greater financial and operating flexibility as a private company in order to support and drive collaboration amongst these entrepreneurial partners,” Dan Glaser, a partner in CD&R, said in a statement.

The transaction is expected to close in the third quarter of 2023, with Focus ceasing to be a publicly traded company upon consummation of the transaction. CD&R and Stone Point will finance the transaction with fully committed equity financing that is not subject to any financing condition.

DeVoe: RIA M&A Activity Slows in Q1

Registered investment adviser M&A activity continued to slow in the first quarter of 2023 and is on track to record the first down year for deals in more than a decade, according to DeVoe & Co. research released Monday.

M&A has dropped 22% year-to-date versus the same period last year, according to the consulting firm, with 38 transactions year-to-date in 2023 versus 49 in the same period last year.

The January 2023 tally of 24 transactions was 14% lower than the total in January 2022. Transactions in February have dropped 33%, with only 14 transactions announced through late February versus 21 in the same period last year.

“It’s early innings, but 2023 is tracking toward the industry’s first down year in over a decade,” David DeVoe, founder and CEO of DeVoe & Co., said in a statement. “On the one hand, the drop is not a surprise. There are many pressure points that historically have suppressed RIA M&A, including a declining stock market and high interest rates.”

Fatigue among potential sellers and a pullback from mid-tier buyers have contributed to the slowdown, according to DeVoe. The drop is also stark in part due to robust dealmaking in 2022, when sellers sought to complete transactions ahead of anticipated tax increases. Many transactions in early 2022 were executed in 2021, but announced in the first two months of 2022, DeVoe said.

Completed transactions in the year-to-date period are predominantly larger, DeVoe found, with 39% of transactions involving sellers with greater than $1 billion in assets, compared to only 16% in Q4 2022 and 29% in Q1 2022.

DayMark Wealth Adds Former Ohio-Based Wells Fargo Team

DayMark Wealth Partners LLC has built up its team in Ohio by bringing on wealth managers overseeing $450 million in client assets.

Cincinnati -based DayMark has brought on Jacob Krecic as managing partner, Justin Fitchko as managing partner and Marty Hopkins as senior managing director, as well as three other director-level client relations managers. The team will operate from DayMark’s newest office locations in Westlake and Pepper Pike, Ohio. Krecic and Fitchko previously led the Krecic Fitchko Wealth Management Team at Wells Fargo.

“The wealth management landscape has changed considerably over the last several years,” Krecic said in a statement. “Clients demand objective advice and counsel, untethered from banking/financial institutions who commonly have their own self-interests shaping their views and driving their recommendations.”

Daymark has about $2 billion in assets under management. The firm did not disclose terms of the deal.

Exencial Wealth Advisors Snags Shoreline Financial Advisors

Exencial Wealth Advisors has added Shoreline Financial Advisors, bringing on board advisers Brendan Smith and Patrick Smith, along with $220 million in client assets.

The deal marks Oklahoma City-based Exencial’s third acquisition of a Connecticut-based firm. The Smiths will remain on the team as partners and senior wealth advisors, according to Exencial.

“We felt an authentic connection to the team at Exencial from day one,” Brendan and Patrick Smith said in a statement. “Not only will our clients continue to receive the same personalized service they have come to expect, but they will also benefit from an enhanced pool of resources as they plan their financial future.”

Exencial, which did not disclose terms of the deal, said the acquisition contributes to its goal of adding registered investment advisers. In 2020, the firm acquired Willingdon Wealth Management, a North Carolina-based RIA.

EP Wealth Bolsters New England Business With Resolute Financial LLC

EP Wealth Advisors LLC continued its national expansion plans with the purchase of Resolute Financial LLC, which has two offices in Massachusetts and one in New Hampshire from which it oversees $350 million in client assets.

Torrance, California-based EP Wealth’s acquisition is its fourth on the East Coast since September 2022 and brings its footprint in the region to seven offices. EP Wealth, which did not disclose terms of the deal, has now made seven acquisitions since the start of 2022.

Resolute leaders Chuck Johnson, Tom Dwyer and Bill Simpson will join EP as senior wealth advisers, according to the firm.

EP Wealth stated that the acquisition sets the stage for “further growth in the region” and marks its 27th acquisition over the last five years. The firm has more than $16.1 billion under management, 30 offices across 11 states and more than 340 employees.