Focus Financial Partners has added matchmaking to its portfolio.
Getting to intimately know the business and culture of fellow Focus firm CapGroup Advisors over the past three and a half years was key to this week's merger, says Michael Nathanson, chairman and chief executive of Boston-based Colony Group.
"We really got to know CapGroup well as a Focus partner and recognized the synergies between the two firms," Nathanson says. "They have an outstanding institutional business and we will benefit from their experience and expertise. Our strength in financial planning and investment management makes the combination a great fit."
Geography and executive talent were also critical to the match, Nathanson adds. "The Middle Atlantic market was the logical next place for us," he says.
The smaller firm -- CapGroup had $308 million in discretionary assets under management as of early February, while Colony had almost $3 billion -- will be changing its name to Colony Group. CapGroup's senior team, including Todd Early, Clay Eubank, Tim Jester, Jeremy Kuhlen and John White -- are joining Colony, with all 12 team members remaining in the Richmond, Va., office.
COMMITMENT TO GROWTH
The move underscores Colony's commitment to growth, Nathanson says.
"When we joined Focus in October 2011, we had $1.2 billion," he says. "With the addition of CapGroup, we'll have over $5 billion" -- a total that includes nondiscretionary assets. "That's why we joined Focus -- so we could grow faster and more efficiently. They helped us completely rebrand, and helped with strategic planning, new tech platforms, human capital and business development training."
The merger between the two Focus firms aligns strategic and tactical goals, say industry consultants.
"Focus has done a good job of fostering good relationships between their partner firms and figuring out compatibility," says Ryan Shanks, founder of Finetooth Consulting. "I see too many organizations focused on wanting to get the new win as a stand-alone acquisition versus joining two existing firms for organic growth."
The affiliate-to-affiliate combination makes sense, agrees John Furey, principal of Advisor Growth Strategies. "It distributes partner risk, increases scale and may also increase long-term partner liquidity," Furey says. "I can see Focus doing more of this in the future, and potentially encouraging it."
HOME-OFFICE SUPPORT
Focus does structure, finance and support integration when partner firms merge, a spokesman says. "While intra-Focus mergers are not a strategic priority, we are fully supportive of highly synergistic matches," the spokesman says.
Colony, which now has six offices from New England to Florida, will continue to pursue both organic and inorganic growth, with "no geographic restrictions," Nathanson says.
Questions about the timing of a much talked about
"We remain very bullish on Focus," he says. "When and if they go public has no impact whatsoever on us. We remain an independent firm and our allegiance is only to clients, not to shareholders."
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