How Captrust earned a $1.25bn valuation
June 3, 2020
Louis Diamond Quoted
By Ian Wenik
Captrust’s decision to sell a 25% stake to private equity firm GTCR may mark the start of a new era for both itself and for private equity investment in the RIA industry.
The valuation — $1.25bn — may help set a new bar for investors in the RIA space. United Capital netted $750m in cash when it sold itself to Goldman Sachs in 2019.
Historically, 401(k) plan client assets have lower profit margins than traditional wealth management assets. But it would be hasty to look at Captrust’s proportion of 401(k) assets and assume that GTCR overpaid for its stake, explained Louis Diamond.
‘While their AUM number is not a proper gauge of value, it’s a large and scalable company with a track record of M&A,’ said Diamond, an executive vice president at advisor recruiting and consulting firm Diamond Consultants.