Savant Capital Management has closed on its third acquisition of a fellow RIA firm over the past 17 months with the purchase of Orion Capital Management of Winnetka, Illinois.
With the April 30 addition of Orion Capital's $150 million in client assets, Rockford, Illinois-based Savant's total AUM has risen to nearly $4.5 billion. As for future acquisition plans, Brent Brodeski, Savant's CEO, said "we've got another one in the works," and as for Orion, the plan is to "grow it to $500 million over the next three to five years."
Brodeski declined to provide specific financials around the acquisition, but similar to Savant's other deals, there was a cash payment to Orion's owner, James Kyle, based on a multiple of Orion's EBITDA, along with a note and an earnout period. Kyle also received "some units of Savant LLC" so "he has skin in the game," Brodeski reported. "The economics are favorable to Jim," he said, and there are "significant incentives" to grow Orion's business post-acquisition.
While that's a similar structure to other RIA acquisitions, Brodeski points out that the key to the deal was to "lock in the next generation of advisors," so that two younger advisors at Orion, Michael Denten and Steve Cummings, "bought into Savant" as part of the acquisition.
Brodeski says Kyle was "looking for a succession plan" but also wanted to "stick around for a few years," so Savant's deal was attractive. "There are not a lot of great solutions out there from a succession planning viewpoint in the industry," said Brodeski, and it's also difficult to find good advisors for a growing firm like Savant, so "if you can't hire top talent, you have to buy it."
Orion was attractive to Savant, despite it being "very picky" about the acquisitions it makes, because the two firms were "culturally aligned" and shared "a common vision," Brodeski said.
"Rollups do federations of firms, run independently," he said, referring to rollup acquisition firms like Focus Financial, but Savant's vision is "not becoming a financial investor in a firm but creating one firm," sharing a common name but using the better technology, marketing and overall support of a larger firm in order to "create really good leverage" for the advisors in Savant, which has nearly 130 employees. "We want our advisors to advise," he said. "That's the vision."
