By Merit Financial Advisors, with $9 billion in assets under management, has recently sold a stake to fund manager Neuberger Berman in a new round of capital investment. This cash infusion will enable Merit to finance the purchase of registered investment advisor firms, reinforcing their reputation as aggressive acquirers in the industry.
According to a recent report by DeVoe & Company, Merit has already made seven acquisitions this year, putting them second only to Wealth Enhancement Group, which has executed nine deals. The consultancy and investment bank stated that this infusion of capital by Neuberger Berman Capital Solutions is intended to fuel a series of beneficial mergers and acquisitions.
Rick Kent, the founder and CEO of Merit, expressed his enthusiasm for the partnership with NB Capital Solutions, stating that it provides access to additional capital for future acquisitions. He emphasized the company’s commitment to rapid growth and providing exceptional offerings and personalized experiences for their advisors, partners, and clients.
Equity infusions have become increasingly popular within the RIA industry as the market for taking companies public has soured. This move by Merit reflects their proactive approach to securing funds for expansion and maintaining their position as a leading player in the industry.
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The Changing Landscape of RIAs: A Shift to Private Equity Investment
Introduction
In recent years, a notable trend has emerged in the world of Registered Investment Advisors (RIAs). Many large RIAs, instead of pursuing a public offering, have chosen to sell a stake in their business to private-equity investors. This change in approach has been driven by various factors, including the desire for capital infusion and strategic partnerships. One prominent example of this shift is Focus Financial Partners, a pioneering RIA aggregator that recently made the transition from being a publicly traded company to going private. Merit, a hybrid practice with advisory and brokerage wings, has also experienced significant growth through external investment. Let’s delve into Merit’s journey and explore the implications of this changing landscape.
Merit’s Growth and Acquisitions
Merit has witnessed substantial growth and expansion in recent times, with acquisitions playing a crucial role in fueling its progress. In January 2021, the firm made headlines by announcing the sale of a stake in its business to Wealth Partners Capital Group and an investor group led by the well-established private-equity shop HGGC. This strategic move has provided Merit with the necessary resources to further augment its operations.
Impressive Assets Under Management
As of the time of the transaction, Merit already boasted an impressive $4.8 billion in assets under management across its advisory and brokerage businesses. However, the firm’s growth trajectory has continued unabated. Today, as we approach September 2023, Merit proudly manages nearly $9 billion in client assets through its twin business channels. This remarkable feat highlights the success and effectiveness of Merit’s investment strategies.
Embracing Neuberger Berman’s Investment
Neuberger Berman’s recent investment in Merit has generated considerable excitement within the industry. Rich Gill, co-founder of Wealth Partners, expressed his delight at this development, emphasizing that it serves as a testament to Merit’s remarkable growth and scalability. The addition of Neuberger Berman to Merit’s investor base further solidifies the firm’s position and sets the stage for even greater achievements.
Conclusion
The shifting landscape of RIAs, as demonstrated by Merit’s venture into private-equity investment, highlights the evolving nature of the industry. This strategic shift allows RIAs to access much-needed resources, forge valuable partnerships, and accelerate their growth. As Merit continues its upward trajectory, it serves as an inspiring example for other industry players seeking to adapt and thrive in an ever-changing financial landscape.
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