Hungry RIA Acquirers Creative Planning, Mercer Advisors Close Covid Deals
Demonstrating that the Covid-19 pandemic has not eviscerated all 2020 business plans, serial RIA acquirers Creative Planning and Mercer Advisors on Tuesday announced purchases of more financial planning firms.
Denver-based Mercer Advisors supplemented its acquisition spree with Argosy Wealth Management, a Beverly Hills, Calif. firm with nine employees managing $330 million in assets for about 300 households.
Terms of the deals were not announced.
“There’s still a lot of capital to be deployed based on business plans, and despite Covid, you can’t take a year off of the plan,” said Rick Dennen, president and chief executive of First Commercial Finance, whose Oak Street Funding unit offers unsecured loans to cash-flow-dependent businesses such as RIAs. “Though some smaller deals are on hold, the demographics of aging and other factors motivating them continue.”
Creative Planning and Mercer Advisors, for their parts, are backed by private equity firms with a yen to deploy cash. Creative CEO Peter Mallouk sold a minority interest in his firm in February to General Atlantic, and Mercer is majority owned by Oak Hill Capital and Genstar Capital.
Starfire President Ron Humenny, a Detroit native who founded the financial planning firm in 1991 and says his clients include local executives of Detroit Edison and Kmart, was “in no rush to find a buyer” and thoroughly investigated 12 other “potential suitors” before settling on Creative Planning, he and Creative said in prepared statements.
Humenny had spent several years talking with different RIAs but “didn’t want to finish his search without a conversation” that began a few months ago, according to Mallouk.
“We hit it off,” Mallouk said in a prepared statement. “His practice matches our philosophy and we are going to be able to provide his clients with the additional services he was seeking.”
Mercer Advisors Vice Chairman Dave Barton said that the $18.5 billion-asset RIA aggregator had to prove itself in a beauty contest held by Argosy Wealth founders Michael Karon and Alex Kimura.
“Mike and Alex had a number of suitors interested in acquiring their business and rightly so,” Barton said in a prepared statement. “What set us apart from other buyers was we had high cultural alignment, we operate similarly, and share the same values and beliefs.”
Karon and Kimura, who founded Argosy in 2011, said they were attracted to the in-house estate planning and tax services Mercer offers. “Mike and Alex can now stop wearing 12 hats like most small business owners do, and, instead, focus on what they love doing,” Barton said.
The sentiment has convinced others who closed a surprisingly strong number of deals during the second quarter amid the pandemic, according to Carolyn Armitage, managing director of Echelon Partners, an M&A advisor to RIAs.
“Firms are seeking sustainability, both on sellers’ side and the acquisition side,” she said. “They are wanting to achieve better economies of scale, optimize value and offer better quality expertise and services while implementing an enduring succession plan for clients and employees alike.”