A Canadian investment manager who is backing one of the most active acquirers this year is acquiring a stake in another of the major consolidators behind the record volume of transactions.

By agreement announcement on August 24, between the private equity arm of Onex Corporation and TA Associates, the current majority owner of RIA’s wealth-building group sells part of his stake in the Minneapolis-based company. Onex and TA Associates, which bought Wealth Enhancement two years ago of another private equity firm, will be “equal capital partners” in Wealth Enhancement, according to a press release. AIR has exceeded $ 40 billion in client assets this year after acquiring 10 different RIAs. The parties have not disclosed any further details about the deal, which is expected to be finalized by the end of the year.

A company that become part of Onex financial services wallet last year, OneDigital, announced five M&A in the second quarter, the largest number in the wealth management industry, according to at the investment bank and consulting firm Echelon Partners. Wealth Enhancement finished second with four deals announced. Onex Partners V and some Onex co-investors, including the parent company itself, will join TA Associates as owners of Wealth Enhancement, which also has around 200 employees with stakes in the company, according to CEO Jeff Dekko . Wealth Enhancement, which uses LPL Financial as a broker, has had “financial partners dating back to the 2000s,” Dekko said in an interview.

“It’s very beneficial for organizations to mature,” said Dekko. “You get very strong reports, you get very good disciplines that benefit everyone. “

Employee share ownership alongside outside investors, he added, ensures that advisers and executives are “made to think, ‘How does the company benefit? ” also.”

After the deal closes, Onex will get two seats on the Wealth Enhancement board alongside the two for TA Associates, according to Dekko. Other members include Morningstar CEO Kunal Kapoor and A. Charles Thomas, vice president of data science at Facebook. Wealth Enhancement has become one of the largest and fastest growing AIR hybrids.

“WEG is definitely in the top tier when it comes to the size of RIA companies,” Transition to RIA consultant Brad Wales said in an email. “There will always be opportunities in the market for small businesses, but WEG’s continued growth is indicative of the emergence of what are known as super-regional or national RIAs.

The company’s existing and future private funders have issued respective statements on their deal.

Wealth Enhancement “has demonstrated its ability to be successful in a wide range of industrial, market and economic cycles,” said Onex chief executive Todd Clegg, who is also listed by the company’s website as the head of file of its OneDigital investment. “Looking ahead, we are confident that WEG remains uniquely positioned to continue to grow, both organically and by continuing its track record of well-executed acquisitions. “

TA Associates Managing Director Roy Burns praised Dekko’s management team for “generating consistent growth and strong customer retention rates, even in the face of extraordinary events such as the pandemic and the disruption that surrounds it. result in markets and our economy ”.

The law firm Goodwin Procter acted as counsel to TA Associates and Wealth Enhancement, while Fried Frank represented Onex. Wealth Enhancement has selected Raymond James & Associates as its financial advisor.

In addition to its relationship with LPL as its broker and one of its custodians, Wealth Enhancement has had its own limited-use broker since June 2004 called Wealth Enhancement Brokerage Services, according to FINRA BrokerCheck.

To illustrate its size and the number of companies working with Wealth Enhancement to some extent, the company’s latest Form ADV brochure mentions third-party payments described as “help with technology-related expenses” totaling nearly $ 1. , $ 5 million from six custodians: Pershing Solutions for Consultants ($ 18,200); Raymond James & Associates ($ 60,000); LPL ($ 72,380); TD Ameritrade Institutional ($ 139,167); National Financial Services and Fidelity Brokerage Services ($ 245,861); and Charles Schwab ($ 960,000).

Wealth Enhancement’s incoming funder has $ 46 billion in assets under management, according to the Onex website. Its private equity operations generated 2.6 times the company’s return on invested capital. Dekko has rejected any possible connection between a strategy of selling Onex funds and his investment in Wealth Enhancement.

“We are an independent company and we are absolutely not a distribution channel for anyone,” said Dekko.


Source link