United Capital jumps back into M&A market, with more to come

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United Capital Financial Advisors is buying RIAs again.

One of the industry’s largest aggregators, with nearly 70 acquisitions since 2005, United’s inorganic growth slowed dramatically last year when it closed on only three deals.

But the RIA giant has rebounded in a big way, snapping up two advisory firms with over $800 million in combined assets under management.

Irongate International, based in Moline, Illinois, and Peachtree Investment Advisors in Atlanta, with assets of $455 million and $345 million respectively, are being acquired by United for an undisclosed amount of cash and equity.
United’s proprietary MoneyMind financial planning software, part of the firm’s behavioral finance-based FinLife platform, is particularly appealing to Irongate, according to Tony Carpita, the firm’s COO.

“We work with high-net-worth families, many of whom are second and third generation,” Carpita says. “We decided that if we were going to continue to service those clients we need to be looking at the behavioral finance side of the business.”

The investment philosophies of the two firms also lined up, particularly adherence to Modern Portfolio Theory, portfolio diversification and the use of separately managed accounts, Carpita says.

“What I am hearing from [larger] firms are the same challenges faced by the $300 million firms,” says Matt Brinker, United's chief business development officer.

In addition, Irongate shareholders including Ted Baker, Tait Johnson and founder Patrick Trimble wanted to make sure their equity was converted into shares of an acquirer, Carpita says.

“We wanted to have skin in the game,” he says.

Expect more deals from United with larger firms this year, says Matt Brinker, the company’s chief business development officer.

“What I am hearing from these firms are the same challenges faced by the $300 million firms,” Brinker says. “They also need fee rationalizing, differentiation, organic growth, operational complexity and technology integration.”

FinLife, launched by United CEO Joe Duran in 2016 as the embodiment of his “financial life management” philosophy will also continue to be a priority for the company.

United says it has spent around $30 million, servicing and marketing the financial planning software to date. In an interview in January, Duran revealed that he hired New York investment banking firm Moelis and is seeking to recapitalize United, soliciting investors to help fund FinLife and other initiatives.

Asked for an update on the recapitalization process, a company spokesman declined to comment.

MoneyGuide, one of United’s financial planning software competitors, was bought by industry tech giant Envestnet last month. Following the purchase, MoneyGuide is expected to challenge Fidelity’s eMoney for market dominance.

The two companies are expected to control nearly three-quarters of the financial planning software market, according to survey data from founder and producer of the T3 tech conference series Joel Bruckenstein.

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RIAs M&A Behavioral finance Fintech Joe Duran Matt Brinker