Focus Financial Partners has picked up an $800 million RIA, with promises to "turbo charge" its growth.
Focus cofounder Rajini Kodialam says she spent a few years wooing Hank McLarty, founder of Atlanta-based Gratus Capital Management. The firm has $800 million in assets under management, putting it right in Focus's "sweet spot," Kodialam says.
Focus-affiliated firms tend to average $1 billion AUM in size, she says; the largest -- Buckingham Asset Management in St. Louis -- manages more than $23 billion, while the smallest manages about $400 million.
Kodialam describes Focus's investment in Gratus as a purchase of "between 40% and 60% of cash flows." The cash infusion, as well as the availability of Focus's dealmaking resources, will help Gratus "grow dramatically faster than [McLarty] could have grown on his own," Kodialam says.
McLarty, too, cites business development as a key reason for the decision. "Focus provides us with the capital and deal expertise to grow through strategic acquisitions, while still allowing us to maintain our boutique service model," he said in a statement.
McLarty left Morgan Stanley in 2006 to start Gratus, joining NAPFA and embracing the independent model. His firm currently employs 10 people, including McLarty and three other advisors.
In becoming a Focus "partner" firm, Gratus will have access to a "Chinese menu" of tools, Kodialam says -- including legal, marketing, practice management and research support as well as help with other strategic issues.
"There are certain benefits to being part of a larger partnership," Kodialam says. "He has all of the independence, while, as and when he needs it, he has access to every service that is available to every firm [in the partnership] in a tailor-made fashion to enable him to grow."
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