Savant Capital Management has expanded into a wealthy suburban market in the fast-growing RIA's third deal in 17 months.

Orion Capital Management, based in the affluent Chicago suburb of Winnetka, will add $150 million to Savant's assets under management, currently $4.2 billion.

"We've long wanted to be there [on Chicago's North Shore]," says Brent Brodeski, CEO of Rockford, Ill.-based Savant. "It's hard to start with nothing, and now we're starting with $150 million, which we think we can grow into $500 million."

The sale price was undisclosed, but Brodeski says the deal structure was based on a multiple of EBITDA and included equity for key executives including James Kyle, Orion's founder and president, as well as notes and incentive earn-outs contingent on clients remaining with the firm.

In general, Brodeski says, he looks for advisory firms whose founders will stick around for at least five years.


Savant's latest deal exemplifies a growing M&A trend: Larger RIAs scooping up smaller advisory firms, often in the same geographic region.

Brodeski draws a distinction between Savant's deals and those that are part of another major M&A trend: acquisitions or equity stake deals by large industry aggregators.

Many of those deals, he maintains, are "liquidity mechanisms for founders. For certain firms who want to take some chips off the table, they make sense."

Top executives of smaller firms partnering with Savant, according to Brodeski, were more interested in spending more time getting and working with clients and less time worrying about personnel, compliance and technology in the day-to-day running of the business.

Aggregators, he argues,  provide "capital and deal know-how but don't create a lot of value."

Savant's success, Brodeski claims, has been based on providing smaller firms with resources they wouldn't have otherwise, including a three-to-one ratio of support personnel per advisor.

Paragon Advisors doubled its business development success in the 12 months after it was bought by Savant early last year, Brodeski says, acquiring $30 million in new client assets -- and Orion, he adds, is "at approximately the same point in its growth cycle."


The deal began to take shape last year after a relationship manager from TD Ameritrade, which provides custodial services to both firms, introduced Brodeski to Kyle, who was looking for a succession plan.

After "sorting through what made sense for them," the two sides reached a deal that included equity stakes for two younger "next-generation" advisors, Mike Denten and Steve Cummings, who Brodeski says are key to the firm's growth.

Approximately 25% of Savant's growth has come through its five acquisitions in the past three years, and the RIA will continue to be on the lookout for more strategic deals, Brodeski says.

"We're looking with firms with a similar culture, a common investment philosophy, a shared vision and an interest in being part of something larger," he says.

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