How a $654M RIA’s succession plan morphed into a strategic M&A deal
Fountain Financial Associates had a perfectly good internal succession plan in place.
It was “working just fine,” says Vinton Fountain, the founder of the $654-million RIA.
But mounting pressure from several quarters upended the 36-year industry veteran’s plans.
What forced his hand?
Fountain launched his Wilmington, North Carolina-based firm in 1998. The business grew, but as the industry evolved, he noticed “continued pressure on firms like mine for increased support for tech, compliance, HR and other non-client related activities.”
And as Fountain Financial became more successful, the resources needed for operational activities increased to the point where Fountain began to entertain offers from a variety of prospective buyers.
Merging with another firm was an “offensive strategy,” Fountain says. “We wanted to be able to innovate, evolve and serve clients for the next decade.”
The RIA’s suitors included banks, private equity firms, large RIAs and even wealthy individuals. The problem, according to Fountain, was that “in most cases [the buyers] were interested in a financial transaction…and we wanted a strategic transaction.”
Enter Captrust, one of last year’s most active buyers.
Captrust was the sixth most active RIA buyer in 2019.
The $18-billion Raleigh, North Carolina-based RIA, which also has a massive retirement business, met Fountain’s criteria for a strategic partner with a national presence, substantial capital resources and similar values. The firm’s proximity to Wilmington also helped.
The resulting cash-and-equity deal is Captrust’s first this year. Terms were not disclosed. Wilmington will be Captrust’s fourth office in North Carolina, along with Raleigh, Greensboro and Charlotte.
In an extremely competitive sellers’ market last year, Captrust was the sixth most active RIA buyer, tied with Hightower Advisors, which also bought four firms, according to statistics compiled by Fidelity and FA Insights.
RIAs affiliated with Focus Financial Partners and Wealth Partners Group combined for over 30 transactions. Aggregators Mercer Advisors (11 deals), Wealth Enhancement Group (six) and Mariner Wealth Advisors (five) were the other leading buyers.
Captrust’s M&A activity impressed Fountain. “Their growth, and their vision, were attractive to me, my colleagues and my clients,” Fountain says.
His vision for the future of the advisory business is also optimistic.
“People need more help than ever,” Fountain says. “The ability to work with families and support decision-making in a complicated world where things are starting to look alike is a very viable business model.”
Advisors Buck Beam, Brice Gibson, Chris Riley and Bob Warwick will join Fountain at Captrust.