An ambitious RIA with 800 clients and less than $200 million in assets under management is ready to spread its wings.
Industry consultants continually stress the need for small and mid-sized RIAs to be able to grow to survive, and Nebraska-based Allen Capital Group has done just that, acquiring fellow Cornhusker Falco Financial Services.
The deal brings Allen's assets under management to approximately $250 million, and Mark Allen, co-founder and president of the Grand Island-based firm, says Allen plans to keep expanding its Midwest footprint.
"We have to continue to grow and we'll be looking at acquisitions, mergers, tuck-ins and roll-ups, all of the above," Allen says. "We know we have other entities involved."
The Falco deal, had been in the works for several years, expedited by founder Fred Lockwood's need for a succession plan. Falco had around $60 million in AUM.
DEAL TERMS
"This was not a shotgun wedding," Allen says. "I knew Fred, and we spent years talking about who we are, who they are and what we could do together. I met his clients, and Fred will remain as an employee for at least two years. That's a big thing, because Fred has the relationships and he needs to be around - and wants to be around."
Negotiating the deal terms, including a valuation based on a multiple of gross revenues, went smoothly, Allen says. He did caution advisors considering making acquisitions to be realistic about the numbers when considering a deal.
"The seller always thinks the firm is worth more, but buyers should stick to their guns and not get over-anxious just because they want to close," Allen says.
After the acquisition closes, Allen wealth manager Phil McBride will move to Scotts Bluff, Falco's home base, to bolster the firm's presence in western Nebraska.
Allen has no minimums and a wide range of clients, including professional athletes, Allen says. As land values continue to rise dramatically, the firm's estate planning services have become increasingly important for farmers in agriculture-oriented Nebraska.
"There may be estate tax issues for farmers," Allen says. "And often 90% of their net worth is in land, which is not liquid."
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