A year after a private equity infusion and its then-largest acquisition as a firm, a major RIA consolidator’s latest deal more than doubled the size of its record.
Wealthstreet Investment Advisors — a Dallas-based RIA with five financial advisors and four other employees managing $1.18 billion in assets under management — sold to Beacon Pointe Advisors on April 1, the firms said. The parties didn’t disclose the terms.
It’s the biggest transaction to date for Beacon Pointe. In March 2020, the firm announced that Abry Partners acquired a minority stake in the consolidator, which also unveiled an acquisition of a practice with $460 million in AUM, its largest deal at the time. Abry’s’s investment in Newport Beach, California-based Beacon Pointe was one of 26 minority stakes in RIAs acquired in 2020 and one of the ten largest, in terms of the seller’s AUM, according to investment bank and consulting firm Echelon Partners.
While its newest deal pushes Beacon Pointe’s total client assets near $15 billion, the acquiring firm is “still small and entrepreneurial like us,” Wealthstreet partner Michael Beck says.
“We’ve been around a long time; our clients are like family,” Beck says. “Anything we did first and foremost had to create something positive for our clients.”
Wealthstreet’s partners found Beacon Pointe attractive because the the firm offered new technology, the ability to add Fidelity Clearing & Custody Solutions to Wealthstreet’s existing custodial options of Charles Schwab and TD Ameritrade and increased planning and investment opportunities, while removing the burden of running the RIA, Beck says.
Beacon Pointe Advisors
Noting that Beacon Pointe’s “first couple of screens” for potential investments are “no jerks and no jerks,” CEO Shannon Eusey praises Wealthstreet’s impressive track record since launching in 1977 and the intelligence and thoughtfulness of its team. Beacon Pointe has 129 financial advisors across 21 different practices in the RIA.
“We’ve actually built an RIA, so we know what it feels like to be going through the growing pains,” Eusey says. “We attract people that are of the entrepreneurial mindset and that are looking to have a voice in the evolution of Beacon Pointe, as well as the industry.”
Wealthstreet had originally launched as Gerald L. Ray and Associates, one of the first independent RIAs in the Dallas-Fort Worth Metroplex. The firm rebranded to Wealthstreet in 2017 as part of a succession plan, according to Beck. In addition to him, the equity partners include Gerald Ray, his son Joe, portfolio manager Michael Kane, 401(k) advisor Leslie Reynoso and CFO Lynette Heil. Investment bank Park Sutton Advisors represented Wealthstreet in the deal — which Beck says has been in the works for roughly a year.
Wealthstreet’s deal marks a half dozen firms with more than $3 billion in combined client assets acquired by Beacon Pointe since Abry’s infusion last year, according to Echelon Partners. The firm called Abry’s minority stake one of the “most prominent and influential deals” in 2020.
The PE investment “allowed Beacon Pointe to recapitalize and pursue an increased number of acquisitions in a competitive market,” Echelon’s 2020 RIA M&A Dealbook says.
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