Can Peter Raimondi replicate his dealmaking success?
Veteran RIA dealmaker Peter Raimondi is getting serious traction, completing his fourth acquisition in just over a year to bring the AUM of Dakota Wealth Management to close to $1 billion.
After a string of deals over an eight-year period, Raimondi sold his previous advisory firm, Banyan Partners, to Boston Private for an estimated $60 million in 2014. Before launching Dakota last year, Raimondi founded and ran Boston-based Colony Group for 20 years.
Dakota’s latest acquisition is Springside Partners in Akron, Ohio, which has $258 million in AUM, according to the firm’s latest Form ADV. Co-founders Carina Diamond, Brenda Hood and Patrick Hahn, along with other shareholders received cash and equity but no specifics were disclosed. CEO Diamond will become Dakota’s chief client experience officer.
Does Raimondi envision a repeat of his Banyan playbook?
Dakota, which had $680 million in AUM before its latest deal, is focused on long-term growth, he insists, building up wealth for shareholders and doing “an exceptional job for clients.”
While there’s no timetable for a liquidity event, “I don’t say it will never happen,” Raimondi says. Dakota is bound to “draw attention” from prospective buyers, the CEO acknowledges.
Deals terms and valuations become more difficult as acquiring firms near $5 billion , says Dan Seivert.
“I expect to receive offers over the firm’s lifespan,” Raimondi says. “Would we accept? I have no idea. That’s not our focus or intention.”
Raimondi’s M&A track record is a double-edged sword, says Dan Seivert, CEO of consulting and research firm Echelon Partners.
The veteran executive’s ability to get deals done is a plus, Seivert says. So is the fact that at this stage of Dakota’s trajectory, advisors have an opportunity “to get in early,” he points out. “Deal terms are more favorable and valuations are more reasonable. Sellers can be more entrepreneurial. That becomes more difficult as [acquiring] firms get closer to $5 billion in AUM.”
Dakota is "primarily an equity portfolio manager," says Raimondi.
But RIA owners who sell into Dakota may not be as happy with whoever eventually buys the firm, Seivert says.
Boston Private’s acquisition of Banyan, he notes, had a messy ending, resulting in executive defections, internal conflicts, lawsuits and Raimondi’s own removal as CEO of the banks’ wealth management division after only eight months.
But Raimondi says advisors will be attracted to Dakota’s emphasis on equity distribution and “a central core investment thesis.”
“We’re primarily an equity portfolio manager and there’s not many left,” he explains. “It’s labor intensive, more difficult and reduces the bottom line.”
But unlike more uniform and scaled asset management options, Dakota can offer a “bespoke investment portfolio with an option overlay… that is very much a differentiator,” Raimondi maintains.
Diamond says she was attracted to Dakota’s similarity to Springside in how it cultivates female clients and works with next-gen advisors. Springside has presented “women in wealth” seminars since it was founded five years ago and half of the firm’s clients are women, she says.
Springside has been approached by 40 to 50 potential buyers over the past few years. “I’ve been on a lot of first dates but not a lot of second dates,” she says.
Previous suitors offered “the same old same old,” Diamond says. But Dakota presented an opportunity to take a national leadership role “that I didn’t see with the others,” she adds.
Dakota’s equity distribution philosophy was also appealing, Diamond says. “We were excited that all members of the team would have the opportunity to become shareholders,” she explains.
Now that Dakota has a presence in Ohio, in addition to its offices in Florida and Massachusetts, Raimondi says he would like to build out the RIA’s footprint in the surrounding area, particularly Pittsburgh, Chicago and Detroit.
Seivert thinks Raimondi has as good a chance as anyone, despite the heated and competitive M&A market.
“There’s more than enough room for many players,” he says. “It’s not as if there’s a scarcity of deals to be had.”