It was Focus Financial Partners' ability to provide capital for mergers and acquisitions that proved decisive in helping the industry's leading consolidator bolt on its 44th firm.
CFO4Life, based in the Dallas suburb of Coppell, Texas, is joining Focus with approximately $433 million in assets under management and practice specialties in tax planning, insurance and 401(k) plans.
The firm’s CEO and founding partner Levi McMellian says he was able to meet many industry aggregators and buyers as a member of TD Ameritrade's Advisory Board. As a result, CFO4Life was able to build up its own internal systems and platforms offered by other potential suitors weren't a priority, he says.
Instead, he was attracted to Focus' culture, partners, support and "$1 billion credit facility for M&A." CFO4Life wants to expand beyond its base in Dallas throughout Texas and in surrounding states, McMellian says.
Quote"We liked the fact that Focus had capital and expertise on the M&A side," says Levi McMellian.
"We liked the fact that Focus had capital and expertise on the M&A side," he explains. "We wanted to retain our autonomy and brand equity and they will let us do what we do well. That was a big differentiator."
TARGETING 401(K) BUSINESS
CFO4Life is targeting the 401(k) business for future growth, according to McMellian. "It's a very fragmented business," he says, with an increasing opportunity for RIAs to step in where other players "don't want to serve in a fiduciary capacity."
Regardless of the ultimate fate of the Department of Labor's fiduciary rule, CFO4Life is "already adhering to a fiduciary standard [in the 401(k) market] and that puts us in a strong position," McMellian says.
The firm, headed by McMellian and founding partner Brian Chastain, originated as the planning division of a Dallas accounting firm in 1998. It broke off in 2006, affiliated with LPL for six years, and spent the last four years an independent. The deal terms with Focus included a cash payout and an equity stake in the partnership, according to McMellian.
CFO4Life also has a partnership with Ash Brokerage, an insurance brokerage firm in Fort Wayne, Indiana, and an office in Pittsburgh.
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