February 16, 2023
Louis Diamond Quoted
by Diana Britton
Service platform NewEdge plans a pivot to acquisitions with a focus on buying the practices of younger, growth-hungry advisors who will then buy and manage firms of retiring advisors in their own regions.
NewEdge Advisors, a New Orleans–based registered investment advisory firm that provides back-office services to other independent advisors, is going into acquisition mode, hatching a plan to buy “growth-oriented” practices run by younger advisors, and then help those firms acquire and manage other practices within their region, according to executives.
The acquired offices will take on the NewEdge branding, and the employees and principals will become W2 employees of the firm.
The idea of buying into firms of mid-career advisors in order to give them the means to then go out and acquire others is a unique model, but potentially challenging, said Louis Diamond, president of Diamond Consultants.
“Advisors really get one shot to sell their business, and usually the most reluctant bunch to sell or to sell part of the business are younger advisors because they have the longest runways, and seemingly the most amount of upside,” Diamond said.
“They seemingly are offering an attractive enough carrot to these younger advisors to want to sell their businesses, because most advisors would like to acquire,” he said. “It’s just very hard to pull off. It’s really difficult to get in front of lead flow. It’s hard to access the capital. It’s hard to actually pull off the acquisitions.” But if a younger advisor wants to grow, and trusts that selling to a “parent company” will put the right opportunities in front of them, “then it’s a potentially elegant solution to achieve that goal.”