Buckingham Asset Management, one of the largest firms in the Focus Financial network, has acquired its eighth location after buying Classic Capital, with $265 million in assets under management.
The deal solves a long-standing succession conundrum for Jay Leonard, who founded Classic in 1989 and recently turned 70.
"I had an agreement with another firm, a local firm, that if something happened to me, they would take over," Leonard says of his firm in Short Hills, N.J. "But, as my firm continued to grow, I needed a plan that wasn't just an agreement, but something on which the acquiring firm could execute."
Once Classic grew to more than 100 clients, Leonard says, he knew a firm of equal size to his would not be able to absorb his firm rapidly enough, if it needed to.
"How were they going to suddenly take on 100 clients or even where are they going to get the money to pay?" Leonard says he wondered.
'EXACTLY THE RIGHT FIT'
He decided to sell to Buckingham because it has an acquisitions team, understands how to buy smaller firms and has a nearly unparalleled reputation in the industry, especially given its fee-only business model. He also agreed with Buckingham's well-known belief in passive investing.
In the process of choosing the right partner, Leonard says, he considered close to ten other firms. One of Focus' competitors, United Capital, didn't make the cut because they do commission business, Leonard says.
Classic and Buckingham entered into a contingency agreement two years ago and decided to transition to a full sale this year, says Adam Birenbaum, Buckingham's CEO.
"Jay's exactly the right fit," Birenbaum says. "We never do transactions just for financial reasons. They all have strategic angles to them. This allowed us to have a presence on the East Coast. It allowed us to start that geographic presence with a wonderful team that's on the ground and a wonderful client base."
Although Leonard has no immediate plans to ratchet down his time commitment at Classic, when he does he knows that Buckingham can help find new team members to join him at the firm and, eventually, to take over its day-to-day operations, he says.
And, in the meantime, Leonard says, he's already enjoying his work much more than he used to.
"I don't have to run a business anymore," he says, sounding relieved. "I was the chief investment officer. I was the chief compliance officer and I would admit that was my least favorite part of the job. Not only does this energize me, but it takes administrative burdens off my shoulders and lets me get back to being a wealth manager. I can spend more time with clients."
- Just How Big is Focus Financial?
- Buckingham Assets Woman Investor Advocate Manisha Thakor
- BAM Alliance Adds Financial Author
Register or login for access to this item and much more
All Financial Planning content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access