Partner, President, Beacon Pointe Wealth Advisors
Senior Financial Writer, Capital Group
Matt Cooper knows the perks of being an independent RIA. But he also appreciates the benefit of plugging into a larger firm.
Solving that paradox — allowing RIAs to keep autonomy yet tap into a larger infrastructure — challenged Cooper to find a new path for selling.
The result? Cooper, president of Beacon Pointe Wealth Advisors, in Newport Beach, Calif., devised an equity-based sales method. Instead of cashing out, RIAs maintain an ownership stake that can be converted to cash later. “Most RIAs don’t want to cash out and walk away,” Cooper says. “By simply engaging in an equity swap … it allows them to continue what they do but have maybe the tools and scale of a much larger firm.”
RIAs are increasingly open to the idea of selling their businesses. So far this year, through the second quarter, 81 RIAs sold stakes in their firms, which is quadruple the number of deals during the same time five years ago, according to DeVoe & Company, which provides consulting services to RIAs. Last year was a banner year for RIA sales transactions, topping 152 deals.
RIA M&A transaction volume has risen steadily.
Number of deals
Source: DeVoe & Co.
More RIAs are pondering selling. Nearly half, 45%, of RIAs are open to talking about selling a stake in their company, up sharply from the 27% who were warm to the conversation just two years ago.
RIAs looking to sell have many options as buyers are eager to find compatable partners. Sixty percent of independent RIAs are open to either buying another practice or are actively seeking targets to buy, Cerulli says. It’s a seller’s market, though, as just 8% of RIAs say they plan to retire in five years or less.
Enter Beacon Pointe, founded in 2002 and with nearly $8 billion in assets under management in its affliated companies including Beacon Pointe Advisors and Beacon Pointe Wealth Advisors. It thinks it has a solution.
The firm’s equity sale structure is something RIAs might consider instead of a straight cash sale, Cooper says. This type of transaction allows RIAs to:
Above all, Cooper says he’s looking to connect other like-minded advisors who are enthusiastic about how liberating the RIA model can be. Cooper started in the business right out of college in an insurance firm that developed into an RIA. He liked the ability to forge relationships with clients, but wasn’t an owner in the firm. That’s what he’s looking to change for the industry with Beacon Pointe.
“Our model is all about allowing somebody to continue in a business that they really love and enjoy and then later exit with cash,” Cooper says. “It’s about people who are future based and excited about the future.”
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