Newport Beach, Calif.-based RIA firm Beacon Pointe Advisors has acquired a Florida advisory with $460 million in assets to add to its $11.5 billion in AUM heft and also add a 16th office to its national footprint.
The firm has acquired Ferrell Wealth Management, a firm in the Orlando suburb of Winter Park. Ferrell’s latest ADV form says that 100 of its 391 clients are high-net-worth individuals who represent $333 million of its assets. The firm’s president and founder is Jimmy Ferrell.
Beacon Pointe president Matt Cooper says his firm acquired Ferrell’s because the firm had right demographic makeup and geographic reach. The deal also lands Beacon Pointe a fourth East Coast office.
The California advisory giant also announced that it was changing its structure, merging its two separate RIAs, Beacon Pointe Advisors and Beacon Pointe Wealth Advisors, into one entity. The role of the latter advisory was to roll up other RIA acquisitions and issue equity to new partners, Cooper says. The firm paid its acquired advisors in the past in equity swaps, but the two entities needed a new structure to align the interests of partners better and use cash in the future to compete for firms.
“When we were doing the original Beacon Pointe Wealth Advisors acquisitions, we were not using cash,” Cooper says. “It was all equity swaps. So we needed to adjust the bonus structure for everybody across both firms in a compensation structure to make it consistent. We needed capital to align all the partners’ [interests]. We also wanted capital on our balance sheet for further M&A so we can begin to do deals incorporating cash in a more traditional sense.”
To help with the restructuring, the firm turned to private equity firm Abry Partners for help it recapitalize with a strategic minority investment. With the extra influx of cash, Beacon Pointe can also continue its aggressive acquisition regime.
“We were attracting people in their 30s, 40s and 50s that were really excited about growing the business,” he says. “What we found over time is that the marketplace has become competitive over the last 10 years, and people are paying more and they are using more cash in deals and we needed to evolve. … We don’t want to lose out on some really quality firms right now because our structure doesn’t include cash.” The age of founders is rising, and they are looking for more cash these days than they were a decade ago, he says.
Beacon Pointe was founded by Garth Flint and his daughter Shannon Eusey, now the firm's CEO, in 2002 to provide private wealth management. The firm turned to the acquisitions game in 2011, largely at co-founder Cooper’s urging. His argument was that many advisors in small businesses were set to retire and squander their enterprise value if somebody didn’t come along and scoop them up. Since then, the firm has acquired a number of other RIAs all over the country and now has offices in 15 cities. The firm has bought 11 firms and lifted a $275 million team out of another entity, Cooper says, but Ferrell is one of its largest deals.
“We’ve been rifle-shooting into primary and secondary markets across the country,” Cooper says. “From there, our number one focus is on the people … the culture. The first three screens are ‘No jerks allowed.’”
Beacon Pointe primarily focuses on private wealth management and uses third-party asset management, acting as a quarterback for high-net-worth individuals, though the firm also has a little over $3 billion in endowments and foundation assets. But the acquisitions have focused on private wealth, and the firm might serve somebody with $154 million on one hand or a few hundred thousand on the other. The firm started out with a stated minimum of $5 million but went downstream when it started appearing on the referral planks of Schwab, TD Ameritrade and Fidelity. The new stated minimum is $1 million, but the firm will go down to help branch partners and many of those clients with less in assets are children of established clients.