In a bid to build a nationwide planning firm, Colony Group, a Focus Financial Partners firm, has acquired two smaller RIAs and has now bulked up to $7.5 billion in client assets.
"It wouldn't have happened without Focus," says Michael Nathanson, CEO and founder of Colony Group, which is based in Boston.
The larger firm Bridgewater Wealth & Financial Management brings $894 million to the table, while Blue Water Advisors brings $385 million. Both transactions closed on January 1.
While terms of the deals were not disclosed, the smaller firms are merging into the Colony Group and will operate under that brand, Nathanson says. The Colony Group now has 43 equity partners, including the partners of both firms.
"Our vision is to be a national company," Nathanson says. "We knew that, while we are pleased with our organic growth, we needed to add inorganic growth to achieve our goal."
In the seven years since his firm entered into an alliance with Focus Financial, the powerhouse aggregator with 51 partner firms including his own, Nathanson's firm has doubled its headcount to include 85 advisors, expanded to 10 offices and completed seven deals.
"They have found most of them and they have funded all of them," Nathanson says of Focus.
Prior to joining Focus, Nathanson says he and his team tried to consummate deals on their own, but without success.
"It was really a lack of experience and a lack of capital," he says. "We found firms that were willing to do [deals]. We didn't like their terms."
Although Colony had raised capital from a bank in 2009 and 2010, it had failed to close a merger with a firm called Mintz Levin Financial Advisors, cofounded by Bob Glovsky, chair of the CFP Board's Center for Financial Planning.
Nine months after joining Focus on Oct. 1, 2011, Colony closed on the deal with Mintz, says Nathanson, who remembers that moment as an important first win.
By adding Bridgewater this year, Colony gains access to the Washington market. Bridgewater, based in Bethesda, Maryland, also has a strong family office and offers specialty services for women clients, branded as Her Wealth, he adds.
"It was designed to provide services specifically to women in transition and women in need of advice," he says. "It's largely run by a group of very successful women at Bridgewater, although men at well. We thought that Her Wealth would complement our program called Women and Wealth. We will now use Her Wealth as the branded offering of the merged firms.”
As for Blue Water, the smaller firm offers a fast-paced entrée into Long Island, New York, Nathanson says.
"We think Long Island is an area that has not been fully penetrated by the RIA industry at this point. We feel it is very fertile territory for some great growth," he says. "This is a firm that has grown fast. It has a great process for bringing in new business and for growing organically and we think that this team will help us improve ourselves nationally in terms of our organic growth rates to complement our inorganic growth rates."
Nathanson, who says he's interested in expanding into Texas, the Midwest and on both coasts, also said his firm will pursue more deals in 2018.
"These are multiple deals that we have in our pipeline," he says. "We have built The Colony Group over the last six years to do mergers. We know we have great opportunities to selectively choose firms to merge with us, so I think you can expect us to do one more transaction this year, but I can't guarantee that."