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Look who's investing big bucks in Savant — and why

Savant Capital Management is flexing its muscles with the help of its new best friends.

The Rockford, Illinois-based RIA, which has grown to nearly $5 billion in assets under management since its launch in 1986, has pumped up its acquisition war chest thanks to an innovative $50 million recapitalization initiative.

Spurred by the liquidity needs of retiring Savant co-founder Tom Muldowney, the recapitalization expands employee ownership in the firm from 19 to 47, adds an impressive array of outside private investors and secures additional funding for future expansion.

Ron Carson, CEO of Carson Group Holdings, and Charlie Johnston, the retired CEO of Smith Barney who was later president of Morgan Stanley Smith Barney, are the best-known of the new private investors.

Savant's new capital structure, which was finalized Sept. 30, provides the company with "a really big checkbook" for future M&A deals, says Brent Brodeski, Savant's co-founder and chief executive.


Armed with more resources, the expansion-minded firm will begin to set its sights on RIAs with more than $750 million in AUM, Brodeski says. Savant's six deals in the last five years have targeted firms with between $100 million and $500 million in assets.

Savant now has 12 offices in three markets: metropolitan Chicago and Washington, as well as Wisconsin. The firm plans to use its newfound capital to expand in its existing markets and establish "beachheads" in cities that can serve as regional hubs such as Cincinnati, Brodeski says.

Outside investors buying into Savant are committed to long-term growth and can't require Savant to sell the firm, Brodeski says. Employees will retain over 75% of ownership.


In addition to Carson and Johnston, the other new private investors include asset manager Cynosure Group, merchant bankers Kingsway Financial Services, three large single family offices — including pickle moguls Vlasic Group — and a dozen other private investors.

"Not only is the amount significant, but that an independent firm was able to attract private investors of this magnitude is more than striking," says Michael Bilotta, an industry RIA M&A consultant who is managing director at Gladstone Associates.

"The financing mechanism is certainly attractive for partners seeking liquidity in addition to other associates seeking ownership, and future hires should appreciate a clear path to ownership," Bilotta says. "More than ever, private investors are recognizing the growing influence of the independent channel and we would expect more investments like this over the long term as firms grow in stature."

Read More: Where one of the fastest-growing RIAs is going – and how it plans to get there


Savant will continue to offer principals of firms it wants to buy a combination of cash, notes and equity, Brodeski says. "We want to partner with firms who share our vision and want to be part of something bigger that will be around for a long time. We're not necessarily the place for people who want to ride off into the sunset," he says.

“We expect this momentum to continue and potentially accelerate over the next five to seven years,” says investment banker David DeVoe.
March 23

Armed with new capital and industry expertise from his new equity partners, Brodeski believes Savant's pitch to prospective sellers will be attractive enough to potentially help the company to grow tenfold and perhaps even have a public offering.

"There are a lot of buyers out there but not a lot of good buyers," he maintains. "We can offer owners table stakes, not a lot of hair on the deal with strings attached and an increased value proposition to serve more clients, grow faster as part of Savant and be able to have another bite at the apple when they take their chips off the table."


Savant faces stiff competition, particularly from the other growth-minded independent wealth management acquirers with a similar pitch to potential sellers. The highly anticipated forthcoming IPO from Focus Financial Partners will be a key indicator of Wall Street's confidence in the future of large advisory firms with national ambitions.

Read More: What's next for Focus Financial?

"The jury is still out," Brodeski says. "If (the Focus IPO) goes well, then it opens up the door for other independent RIAs. If it doesn't go well, it will be difficult for them to grow and it will be harder for other platforms to raise more capital."

Bilotta says he likes Savant's odds.

"We’ve always been impressed by Savant, not only by their commitment to impactful client experiences, but by the relentless execution of their business model," he says. The latest capital raise "only signifies there is more to come."

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