M&A tips at Schwab Impact


The contracts are signed, the champagne glasses have been clinked, and the deal to sell your RIA is done. Still, an owner of a registered investment advisor may have lingering doubts about selling his or her firm.

But there are ways to avoid pitfalls, mishaps and selling to the wrong RIA rollup or aggregator.

One bit of advice to dispel such fears and anxieties is to focus on the attitudes and behaviors of the other firm in the deal. Perhaps first and foremost there should be a simple rule, “no jerks” when making a deal, said Shannon Eusey, CEO of Beacon Pointe Advisors, the largest female-led RIA with close to $25 billion in client assets.

She was speaking in Philadelphia at Impact, the annual meeting for thousands of RIAs that use the Charles Schwab Corp. and its custody group, Schwab Advisor Services, to hold client assets. The title of the panel of eight RIA executives, split evenly between buyers and recent sellers, was, “What happens after the merger or acquisition?”

Eusey said the pressure was on to hire. The financial advice industry is fighting over talented professionals and the fact that there aren’t enough women in the industry. Against that backdrop, she stressed the importance of shared values, beliefs and behaviors when making an acquisition work.

“No jerks, no jerks, no jerks,” she said. “It’s all about culture. As long as it’s a cultural fit for the organization, we can hammer out and work out the rest of the details.”

That’s not all.

Along with shared behaviors and values, there’s always financing to consider and how big a piece of the firm to sell when making a deal, said Rush Benton, senior partner for strategic growth at Captrust Financial Advisors, which oversees $832 billion in client assets.

“It takes a lot of capital to do this,” Benton said.

“The capital structure of the different firms matters,” he added. “If you are looking for a transaction, you will find lots of different models, a lot of different personalities.”

Other RIAs have sold majority equity stakes to outside investors and lost control of the firm to the buyer.

In September, funds managed by the Carlyle Group made “a minority growth investment” in Captrust, the mega RIA reported.

That was the second such PE stake in the firm, following GTCR’s taking a 25% stake in Captrust in 2020, a deal that provided the RIA with a war chest  for acquisitions. Since then, Captrust has bought up 29 firms and boosted its valuation from $1.25 billion to $3.7 billion, according to the firm.

Captrust has sold pieces of the firm to outside investors but still maintains control of the business, Benton noted. Carlyle recently bought a piece, but they are still a minority owner. “It’s just another way to differentiate,” he said.

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