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New M&A target for RIAs? Accounting firms

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Accounting firms may be the next acquisition target for fast-growing RIAs.

Mariner Wealth Advisors, a $31-billion RIA based in Overland Park, Kansas, inked deals to buy two tax practices. More such deals may be on the way, according to industry consultants.

“The shift is to a more robust family office services platform and the trend is toward a broader array of services in order to distinguish one’s firm from the competition,” says Ed Friedman, a former Dynasty executive who is now a partner at New Jersey-based consulting firm Morris Brook.

The Mariner deals are an example of the “dynamic actions we will start to see from an emerging class of RIA mega-firms [aiming to] expand their services beyond the standard lines of wealth management,” says David DeVoe, managing partner of RIA M&A specialists DeVoe & Co.

In Mariner’s case, the expanded tax services “not only provides a broader set of in-house capabilities to Mariner clients, but also creates a stronger value proposition and business development springboard for new clients,” DeVoe says.The firm’s acquisitions came in two states: David G. Miller & Associates in Chatham, New Jersey and G.M. Bremer & Associates in El Segundo, California.

Acquiring the accounting firms allows Mariner to offer clients a “complete financial picture,” says Mariner CEO Marty Bicknell. “Taxes are just as big a financial component as wealth management is.”

Earlier in the year, Mariner bought another CPA firm, RTB Consulting, in Cincinnati. The two most recent deals give Mariner a total of 23 tax preparers, Bicknell says.

Cross-selling wealth management and tax services has been a smashing success.
Chris Plagge, Savant Capital Management

Other RIAs have made similar moves.

Savant Capital Management bought Green, Plagge & Shaw, an eight-person St. Charles, Illinois accounting firm in 2014. The firm has since been integrated into Savant as a wholly-owned subsidiary, Savant Tax & Consulting, which includes 15 CPAs and 29 tax preparers.

Savant will continue “aggressive growth initiatives” for its tax services, says Chris Plagge, who heads the division.

Cross-selling wealth management and tax services has been “a smashing success,” according to Plagge. “We’ve had legacy clients who need wealth management professionals and existing wealth clients, such as business owners considering a sale or a transition, who can leverage our expertise.”

Brighton Jones, a Seattle-based RIA, has also invested heavily in bringing accountants and tax preparers on staff. And in September, The Colony Group acquired Glass Malek, a multifamily office that included a business management arm for creative artists, television personalities and athletes.

Mariner’s other acquisitions included deals in 2019 for six RIA that had more than $4 billion in AUM. All Mariner’s acquisitions, including the accounting firms, are cash-only, Bicknell says.

While Bicknell expects Mariner’s deal flow to slow down this year, he thinks the advisory industry as a whole will maintain its current record-setting pace.

“I’m having conversations with people who three years ago would never sell,” he says.

But the bull market, high valuations and fast growth that exceeded firms’ ability to have an internal succession are bringing more RIAs to the deal table, Bicknell says.

And if there’s a market downturn?

Some buyers will slow down and some sellers will wait it out, he says.

But other RIA owners “will say ‘uh oh we missed it’ and will come to market as soon as they can,” Bicknell says. “If that happens, Mariner will be a buyer, without a doubt.”

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