© 2020 Arizent. All rights reserved.

Amid reports it’s up for sale, hybrid RIA inks 13th M&A deal

Register now

An executive who helped sell a water filtration system to Procter & Gamble may soon be at the center of a major deal in the wealth management industry.

Wealth Enhancement Group agreed to purchase AEPG Wealth Strategies for its 13th acquisition in the past six years, the firm said July 18. The parties didn’t disclose terms of the M&A deal, which is expected to close in October and bring $1 billion in client assets.

Under the backing of Lightyear and the strategy led by CEO Jeff Dekko, Wealth Enhancement has inked the M&A deals and reeled in organic growth of more than $1 billion in client assets each of the past two years. The RIA disclosed $8.4 billion in AUM in its most recent Form ADV.

Dekko is no stranger to inking deals. Prior to his tenure at Wealth Enhancement, he helped lead the development of the PUR water filtration system at Recovery Engineering. The team "successfully sold the company to Procter & Gamble for a 100% premium over market value," according to his bio on the hybrid RIA’s website.

The Minneapolis-based hybrid RIA and LPL office of supervisory jurisdiction has expanded to $11.8 billion in client assets and nearly 100 advisors. The latest deal comes after Citywire reported that a fund managed by a Lightyear Capital subsidiary is selling its majority stake.

Lightyear acquired Wealth Enhancement interest in June 2015, the year before the PE firm and PSP Investments purchased their majority stake in the Advisor Group network. They agreed to sell Advisor Group to Reverence Capital Partners for a reported price of more than $2 billion.

PE firms crowding into wealth management have helped push M&A deals to record high volumes each of the past six years, according to investment bank and consulting firm Echelon Partners. Transactions are on pace to top 200 deals this year for another record.

Wealth Enhancement spokesman Joseph Kuo declined to comment on the reports of the possible sale, citing a company policy against commenting on speculation about transactional activity. Representatives for Lightyear also declined to comment.

Two perennial champions retained their top ranks in 2019 — but the aging demographic poses challenges for all firms, according to J.D. Power.
July 10

Lightyear and Wealth Enhancement enforce an information barrier between the firm and its indirect investor. The hybrid RIA also uses five different custodians — Charles Schwab, TD Ameritrade, National Financial Services, LPL and Raymond James.

Offering custodial flexibility alongside back-office services and lead development has helped draw sellers into Wealth Enhancement’s growing presence in nearly all 50 states. Acquired practices use the hybrid firm’s brand but keep their existing leadership teams in place.

Warren, New Jersey-based AEPG — Wealth Enhancement’s first acquisition in the state — has carved out a niche serving medical professionals with wealth management and retirement plan services. It has 27 employees and more than 600 clients.

“Our clients are successful businesses and individuals who need a trusted ally to make sense of their complex financial situations and guide them on the right path to pursue their goals,” founder Steven Kaye said in a statement.

He described Wealth Enhancement as “a strategic partner who can help us take our client service to the next level, while enabling us to deliver our solutions to a broader set of clients across the country."

Kaye will become a managing director of Wealth Enhancement when the deal closes. The RIA practice’s team is also serving on its incoming owner’s roundtable as experts on pensions and employee benefits, sharing best practices with the firm’s other affiliated offices.

The AEPG deal marked the fourth acquisition unveiled by Wealth Enhancement this year. In January, the firm said it had agreed to purchase a fee-only practice with $500 million in AUM. Wealth Enhancement then reached deals to buy a team with $300 million and another with $1.3 billion.

For reprint and licensing requests for this article, click here.