Nelson Roberts Investment Advisors this week closed its first RIA acquisition, picking up San Francisco Bay Area-based Sylvan H. Kline Jr. Inc. to bring its total assets under management to more than $275 million.
The deal, which was orchestrated by San Francisco-based merger and acquisition consulting firm Advice Dynamics Partners, took roughly six months to consummate and used standard industry cash-flow valuation metrics and other considerations to reach an undisclosed final price that brings more than $30 million more in assets under the Nelson Roberts umbrella.
"Every deal needs to reflect the risk taken on by both buyer and seller," Advice Dynamics Partners CEO David Selig said. "Ideally, it's about using a bunch of different levers to balance that risk appropriately including cash, stock, debt and equity and consulting agreements to get the proper balance of risk for both sides."
Kline, who last summer decided it was time to retire and sought out Advice Dynamics Partners to find a buyer, made it clear from the get-go that his priorities were to receive a fair valuation for his decades-long collection of clients but to also make sure the acquiring firm had a proven investment track record and the right culture, products and technology to provide outstanding service to his longtime clients.
"I am retiring, and it was important to me to find a firm for my long time clients," he said in a statement announcing the deal. "Obviously, that home needed to match my own standards for delivering investment management. These advisors think like I do in terms of their investment philosophy, which was very important to me. I know my clients will be well taken care of."
East Palo Alto, Calif.-based Nelson Roberts Investment Advisors, which provides a wide range of fee-based money management and investment services for high net worth individuals, has successfully transitioned roughly 80% of Kline's clients and could be open to make more RIA acquisitions of this type in the future.
"We saw the opportunity to utilize our existing capacity we had at Nelson Roberts and transition Syl's clients without a lot of additional cost structure," said Brian Roberts, a managing principal at Nelson Roberts. "It was the first deal for Nelson Roberts and we're very excited for the opportunity."
For independent RIAs and financial advisors looking to retire or transition their book of business, the deal proves that succession planning options are available to money managers at any stage in their professional careers.
"It demonstrates that advisors at tail end of careers still have succession options," Selig said. "And while there are more options open to advisors who have multi-year timeframe, you can find a match even when it's time to retire. There will be a buyer for every seller."