Money, money, money: 8 wealth management deals

'Well-run businesses are the real gems in the wealth management space,' said Rob Jakacki, Kudu Investment Management's CEO.

Since the beginning of year, PE Hub has noted a flurry of deals in the wealth management space. It’s an interesting trend, especially at a time when the macroeconomic environment remains tight, wealth managers said. For some firms, the economic turbulence offers an opportunity for growth through acquisitions, while for smaller firms, it’s time to find a bigger and more resourced home that might be in a better position to weather the financial storm. Below we have rounded up deals, starting with the latest.

1. Sequoia Financial Group acquires Zeke Capital Advisors

Yesterday, Akron, Ohio-based wealth management services provider Sequoia Financial Group announced the acquisition of Zeke Capital Advisors, a Berwyn, Pennsylvania-based multi-family office firm that provides generational family wealth management to individuals, families and foundations. Zeke has more than $5 billion in assets under management and advisement and 28 employees.

The deal is expected to close at the end of this month and Zeke will begin operating under the Sequoia Financial Group brand on March 1. “The acquisition will double the size of Sequoia’s Family Wealth practice, both in assets under management and in client households, with the combined teams offering a full suite of services to ultra-high-net-worth families and institutions,” read the press release, which noted that Zeke will bring to the table its experience in delivering unique investment opportunities to clients.

2. Genstar-backed Cetera Financial Group gets minority stake in Prosperity Advisors

Also this month, Cetera Financial Group, a portfolio company of the San Francisco based-Genstar Capital, made a minority investment in Prosperity Advisors, a wealth management firm headquartered in Kansas City.

Prosperity Advisors’ Paul Ewing described the deal as an opportunity for his firm’s growth. “This expanded partnership with Cetera activates our potential to reach new heights, better serve clients and expand our services in new ways for years to come,” Ewing said.

3. Slate Hill takes minority stake in XO Wealth Management

In January, Slate Hill Partners, a single-family-office that primarily invests in financial services firms, acquired a minority stake in XO Wealth Management. Both Slate Hill and XO Wealth Management are based in Dallas.

“As a fellow Dallas-based firm, we’re thrilled to support the growth and future success of XO, which has impressive brand recognition in Texas, a growing client base, and a strong track record of delivering high-quality service. Moreover, our respective cultures of putting the client first totally align,” said Joe Valdman, Slate Hill Partners’ managing partner.

4. Kudu invests in alternative credit manager Variant Investments

New York-based Kudu Investment Management made a minority investment in Variant Investments, a Portland, Oregon-based alternative credit manager. Established in 2017, Variant Investments manages more than $2.3 billion, largely for registered investment adviser clients.

In an interview with PE Hub on trends leading to investments in wealth management companies, Kudu chief executive Rob Jakacki said that during times of economic turbulence the best wealth management firms, with an emphasis on planning and client engagement, can enjoy high levels of client retention.

“Well-run businesses are the real gems in the wealth management space,” he said. Jakacki said some smaller wealth management firms may face operational challenges in a tight macroeconomic environment, and that may lead others to seek a bigger, well-resourced home.

In rocky times too, well-run businesses prove themselves to be invaluable to their clients as trusted advisers, Jakacki said, adding that “oftentimes that’s when they enhance their share of wallet with these clients as investment opportunities arise during times of turbulence.”

5. Stone Point Capital invests in IEQ Capital

Greenwich, Connecticut-based Stone Point Capital earlier this year invested in IEQ Capital, a California-based wealth management firm. IEQ has over $18.3 billion in regulatory assets under management.

Jim Carey, a managing director of Stone Point, pinned the investment on prospects for growth. “We are thrilled to be expanding our partnership with IEQ,” he said. “We have known the leadership team for many years, and we strongly believe they are building a differentiated wealth management platform. We look forward to continuing to support IEQ in its next stage of growth.”

6. Frontier Growth exits Agreement Express assets

Charlotte, North Carolina-based Frontier Growth sold Agreement Express’ digital onboarding and wealth management technology assets to Advisor360° in January.

Advisor360° is an integrated digital wealth management company based in Weston, Massachusetts. The company CEO Rich Napolitano said: “2022 was a year of strong organic growth for Advisor360°. With our first acquisition completed, we’re not slowing down: the Agreement Express transaction meaningfully accelerates our ability to offer expanded choice and connectivity on our platform and we’ll continue to raise the bar in 2023 and beyond.”

7. Oak Hill and Genstar-backed Mercer Advisors acquires Empyrion Wealth Management

The Denver based-Mercer Advisors, which completed more than a dozen acquisitions last year, acquired Roseville, California-based Empyrion Wealth Management in January.

Empyiron was founded by president Kimberly Foss in 2002. The deal marks the 15th women-owned advisory practice that Mercer Advisors has acquired since 2016.

David Barton, vice chairman of Mercer Advisors, who led the acquisition of Empyrion, said in a press statement: “Kimberly is an exceptional financial planner, speaker, author, a real renaissance woman, and her skill set is highly distinct and valuable. We are proud to add Kimberly’s voice to our team and help share our message of financial freedom across multiple media platforms.”

8. Golden Gate Capital recaps wealth management firm Parallel Advisors

San Francisco based Golden Gate Capital last month recapitalized Parallel Advisors, a wealth management firm with approximately $4.8 billion in assets under management for high-net-worth individuals and pension/profit sharing plans. Parallel Advisors is also based in San Francisco.

According to the deal, Parallel acquired Scottsdale, Arizona-based asset manager AUTUS. Emigrant Partners, a New York based investor in wealth management firms, exited both Parallel and AUTUS.

Dan Haspel, a managing director at Golden Gate, pinned the investment on growth prospects. “We believe the firm is well-positioned to continue this momentum through the execution of its strategic plan, which includes a significant increase in organic growth as well as further M&A activity,” he said as he acknowledged Parallel’s management team.