Looking to beef up its presence in New England, United Capital Financial Advisers has acquired the private client group of Westport Resources Management, an RIA in Westport, Connecticut.
Westport, which has $373 million in assets under management, is only the third United office in New England, and only the second deal United has made to date this year. Last year United made 10 acquisitions.
United appears unlikely to match that number by the end of 2016, underscoring the fact that many observers have characterized this year's M&A activity as a seller's market.
But the firm's latest acquisition in a challenging market for buyers is also seen as a validation of United's "financial life management" business strategy, which the company applies to financial planning, marketing and branding.
"Clients and advisors are really gravitating toward the notion of goals-based investing, and [United CEO] Joe Duran and his team has found a way to leverage technology to humanize the investment process," says Matt Sonnen, CEO of PFI Advisers, a Los Angeles-based consulting firm for RIAs. "I expect the industry to continue in that direction and I think United Capital will lead the way."
Westport CEO and founder John Vaccaro certainly agrees.
Even though United didn't make the best financial offer for his firm, he says the firm's centralized business model, financial life management concept and the cultural fit compelled him to sell to United.
"I had other choices, of course, and some were easier," he explains. "We could have been a platform to help other firms grow, but United wants us to be their flagship in New England and being a leader appealed to me. But the cultural fit was most important. A good cultural fit means a much higher likelihood of success."
QuoteVaccaro compares the digital transition in financial services to what car dealers have experienced.
Vaccaro and United declined to disclose the terms of the deal.
United's M&A strategy has become "more selective," says David DeVoe, managing partner of DeVoe & Co, a San Francisco-based M&A consulting firm for RIAs. "This shift, combined with a greater focus on organic growth, may slow down their 2016 acquisition activity," DeVoe notes.
While New England is "incredibly important" for United, Matt Brinker, United's head of national partner development, says the company, which now has over 80 offices in 17 states, is "relatively agnostic on geography."
United is more interested, according to Brinker, in partnering with "the right culturally aligned teams that share the same view of the future of the wealth management landscape and teams chomping at the bit to grow."
BUSINESS IN 'TRANSITIONAL PHASE'
Vaccaro, who founded Westport 30 years ago after a career as a theatrical producer in New York, was convinced United was best positioned to navigate an industry that is in an "important transitional phase."
He compares the digital transition in financial services to what car dealers have experienced.
"Some people prefer brick and mortar and want to go in, look around, kick the tires and negotiate face to face," Vaccaro says. "Others are content to buy online. Advisers are facing a digital revolution that is not going away and is only getting stronger. The key is to integrate the best of digital and human advice and I think United is years ahead of the rest of the industry in that process."
Vaccaro's firm will be renamed Westport Resources, a division of United Capital, which now has bought over 80 firms. Vaccaro will become a managing partner at United and he says all Westport's staff will receive United stock options.
The deal was initiated by Silver Lane Advisors, a New York-based investment bank specializing in financial services. Westport Resources Investment Services, an affiliate of Westport Resources, will continue to operate as a separate entity.