Private equity investors are zeroing in on financial advice business

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The registered investment advisor industry has attracted the attention of private equity investors, thanks to good growth, high profit margins, consistent cash flow and low capital needs.

"All these things moving in the right direction have created a frenzy in the industry."

Private equity, however, has also fueled deals in the mid-size and smaller end of the market through its investments in acquisitive RIAs and consolidator firms such as United Capital — formerly backed by Sageview Capital, Bessemer Venture Partners and Grail Partners, and acquired by Goldman Sachs for $750 million in May — and Focus Financial, in which KKR and Stone Point Capital took a stake in 2017 then brought to the public markets last year.

Private equity investors are projecting a kinder, gentler profile these days — a good idea in the fiercely independent RIA industry. Long seen as short-term investors looking to juice growth and cash out of their investments, more PE firms are now willing to take minority stakes in companies and serve as collaborative partners for advisors.

 

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