November 3, 2022
Louis Diamond Quoted
by Tobias Salinger
A registered investment advisor spun off from a giant accounting firm earlier this year agreed to acquire a billion-dollar practice with 13 financial advisors in its first deal as a standalone firm.
Minneapolis-based Choreo is buying Enso Wealth Management, a California-based RIA with $1.8 billion in assets under management, in a deal at an undisclosed price that’s expected to close by the end of the year, the firms said on Nov. 3. Choreo itself launched independently in February, when private equity firm Parthenon Capital Partners acquired the wealth management arm of RSM, a top five accounting firm. An incoming team of 22 employees from Enso will add to Choreo’s existing base of 28 offices nationwide managing $13.5 billion in client assets.
The increasingly competitive fight among the giant wealth management firms that are rapidly consolidating is prompting many RIAs with between $1 billion to $2 billion in client assets to consider similar deals, according to recruiter Louis Diamond, the president of Diamond Consultants. The need for a succession plan represents the other main factor in rollup deals.
The succession-minded practices primarily seek out “culturally aligned” buyers with the best fit for clients and employees, while growth-oriented firms are also trying to find “some level of autonomy” under the acquirer, Diamond said.
“They want really strong resources to free up their staff, their advisors and to have a more compelling value proposition for recruiting and acquisitions,” he said. “Together they can build something that’s much more valuable than if the firm was just running on its own.”
Diamond described Parthenon as a “smart and sophisticated backer,” given its current investment in the parent company of NewEdge Wealth and past stakes in firms such as Allworth Financial and the forerunner firm to the wealth manager now known as Avantax. The private equity firm invests in companies with enterprise values between $75 million and $750 million in finance, healthcare and business services through funds that have raised more than $5.5 billion in capital commitments, according to its website.