During the past decade, some of the most successful RIAs, independent broker-dealers and wealthtech firms serving the independent space have grown in size at exponential rates. Their success is in no small part due to the backing of leading private equity firms and other capital growth partners, the movers and shakers in the industry that purchase minority and majority stakes in promising businesses.
As ECHELON Partners recently noted in its third quarter RIA M&A Deal Report, strategic acquirers such as private equity-backed RIAs announced 85.1% of third quarter deals and financial acquirers such as private equity firms announced 14.9% of deals. While these investors often have portfolio holdings in other sectors as well, they are highly influential in wealth management, where many of their most meaningful and high profile deals have occurred.
That is why Wealth Solutions Report has decided to honor clear standouts in this field. Please join us in congratulating the inaugural winners of the Cap 5: Top Private Equity And Capital Growth Partners, listed below in alphabetical order.
Emigrant Partners
Emigrant Partners (EP) specializes in providing capital and advice for the wealth and asset management businesses into which it makes long-term, minority, non-voting investments. It seeks to tailor flexible solutions for each partner firm while enabling them to maintain control of their respective strategies, investment decisions and daily operations. Transaction types at EP include founder liquidity, internal succession, growth capital, M&A finance as well as financing for advisor and advisory team recruitment and retention. EP has invested more than $530 million of long-duration capital in 30 companies over its 17-year history.
The firm’s 19 partner firms collectively oversee more than $100 billion in assets under management and advisement. Investments at EP include Beachwood, Ohio-based Stratos Wealth Partners, which has made several advisor recruitments nationwide this year; Hunt Valley, Maryland-based Verdence Capital Advisors, which in April expanded its outsourced CIO offering; Woodland Hills, California-based SteelPeak Wealth, which conducted an acquisition in January; and Palm Beach Gardens, Florida-based Dakota Wealth Management, in which EP completed a second-round investment in May.
In February, industry veteran Liz Nesvold was appointed as Vice Chair of Emigrant Bank and Chair of Emigrant Partners. Nesvold has worked in the wealth management industry for more than 30 years as an advisor, investment banker and executive. Her experience includes mergers and acquisitions, capital planning and fundraising, succession and liquidity planning, strategic advisory, compensation structuring, deep-dive financial and business analysis, and organic growth consulting.
“With strategic investments in 19 of the top firms in our industry, we have direct, daily access to the best practices – and best minds – in the business,” said Jenny Souza, CEO of Emigrant Partners. “The Emigrant Partners team sits right in the middle of this community, and we use it as an opportunity to share intellectual capital and power a unique brand of strategic growth for our Partner Firms.”
Genstar Capital
Genstar Capital invests in middle-market companies in North America in four sectors: financial services, healthcare, industrials and software. Its financial services partners currently include Cetera Financial Group, Docupace, Cerity Partners, Mercer Advisors and Orion.
In October, Cetera acquired $16 billion Concourse Financial Group Securities. In Sept. 2023, it acquired Avantax, which at the time had $83.8 billion in assets under administration and $42.6 billion in assets under management (AUM). Genstar made a majority investment in Docupace in July. In April, Cerity Partners merged with Agility, which had $15 billion in AUM at the time.
Founded in 1988, Genstar operates as one team based in a single San Francisco office. It currently holds approximately $49 billion in AUM and is searching for investment opportunities in founder-owned companies, public company orphans, corporate carve-outs and traditional buyouts.
The firm leverages financial and operational experts to aid management in achieving growth and rapid change. It emphasizes empowerment and autonomy of partner management teams, and aims to provide them with financial resources and sector experience. It also aids with executive recruiting to aid in bolstering management.
Genstar’s team includes over 40 professionals with expertise in M&A, deal sourcing, financial transactions and sector-specific specialists. Its team is augmented by a strategic advisor board consisting of operational experts from target industries, who act as sounding boards, advisors and mentors to partner management teams.
Motive Partners
Motive Partners is seeking to take a dominant position in wealth and asset management by building a next generation front-to-back ecosystem, a combination of companies offering specialist services to the advisor, asset manager and direct-to-investor channels. It invests in technology-enabled financial and business services companies in North America and Europe in five subsectors: capital markets, banking and payments, data and analytics, insurance, and wealth and asset management. Its current holdings include InvestCloud, CAIS, FNZ and BetaNXT.
CAIS serves over 2,000 wealth management firms with more than 50,000 financial advisors and approximately $6 trillion in assets. BetaNXT appointed Robert Santella as CEO in May and has been actively building out its capabilities this year. Motive Partners Chairman Jeff Yabuki is the Chairman and CEO of InvestCloud, whose clients represent more than 40% of the $132 trillion of total global assets. In August, FNZ appointed Blythe Masters, a Founding Partner of Motive Partners, as Group CEO, concurrent with a $1 billion capital raise spearheaded by Motive.
Founded in 2015, the firm has offices in London, Berlin and New York, with over 160 professionals, and has raised $6.4 billion. The firm believes that financial technology has a potential market value of $9.6 trillion by 2030.
“I believe that Wealth & Asset Management presents a globally significant market opportunity, characterized by major generational wealth transfers, new investor types and a shift towards Alternatives in asset allocation,” said Rob Heyvaert, Founder and Managing Partner of Motive Partners.
He continued, “Given the projected growth of the industry, coupled with our management of investments in nearly 20 WealthTech companies, Motive Partners is well-positioned through our proprietary Investor, Operator, Innovator (IOI) model to advance the future of WealthTech; building, buying and backing the technology companies that enable the global financial ecosystem.”
Parthenon Capital Partners
Founded in 1998, Parthenon Capital Partners provides capital and strategic resources to middle-market growth companies in sectors where it has operating and investment experience: financial services, healthcare services and business services. Its financial services investments include Choreo and EdgeCo Holdings, and previously included Allworth Financial and HD Vest Financial Services (now Avantax).
Choreo acquired BDO USA’s affiliated wealth management business, with $8.1 billion in assets, in November 2023. Parthenon exited Allworth in 2020 after growing it to $10 billion in AUM with 10 add-on acquisitions. Parthenon sold HD Vest to Blucora in 2015 after acquiring it in 2011.
Parthenon has completed over 50 platform acquisitions and 200 add-on acquisitions representing over $5 billion in its three target sectors. Seventy percent of its portfolio companies are acquisitive, with an average of eight acquisitions each during Parthenon’s ownership.
Parthenon emphasizes its research-driven approach. It works with management teams of its partners to build them up and accelerate earnings growth both by inorganic and organic strategies. The firm leverages its specialization to provide resources and insights into the risks, opportunities and key issues in each sector.
With offices in Boston, San Francisco and Austin, Texas, the firm has approximately 35 investment professionals. Its team includes specialists in human capital, capital markets, strategy, operations, financial reporting, information technology, acquisitions and integration.
Reverence Capital Partners
Milton Berlinski, Peter Aberg and Alex Chulack – who have more than 100 years of combined advisory and investing experience across a wide range of financial services businesses – founded Reverence Capital Partners in 2013. It has made over $13 billion of investments. Reverence focuses on private equity in the financial services space, opportunistic structured credit and real estate solutions.
The firm’s flagship strategy features thematic investing in major global financial services companies that operate in asset and wealth management, insurance, banks and non-bank finance, capital markets, as well as fintech and payments. Reverence provides capital and active partnership through an approach that aims to both meet the needs of its portfolio companies and help produce superior returns for investors. In the asset and wealth management sectors, Reverence portfolio companies include Russell Investments, Osaic, CAIS, Allspring Global Investments and SEIA.
In May, Osaic completed its acquisition of Lincoln Financial Advisors Corporation and Lincoln Financial Securities Corporation, the broker-dealer and RIA firms that comprise Lincoln Wealth, from Lincoln National Corporation, in a deal representing more than 1,400 advisors overseeing approximately $115 billion in assets. In July, the wealthtech firm Envestnet agreed to be acquired by Bain Capital and Reverence, with BlackRock, Fidelity Investments, Franklin Templeton and State Street Global Advisors becoming minority holders.
“Private equity firms provide capital to fund growth, help navigate succession transitions and drive consolidation in a fragmented market,” said Milton Berlinski Co-Founder and Managing Partner of Reverence. “We enhance operational efficiencies and provide strategic resources to position firms to better capture growth opportunities ahead. At Reverence, we understand the levers necessary for success in the wealth management sector and remain committed to supporting our partner companies and future opportunities. It’s one of our five core sectors, but our most active.”
Chris Latham, Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com.
