Credent Wealth Management, a $2.6 billion registered investment advisor headquartered in Indiana, has raised more than $50 million in capital from Crestline Investors, an alternative investment manager, in the form of debt financing.
David Hefty, CEO of Credent Wealth Management, said the firm spoke with 19 institutional investors, and one of the main reasons they chose Crestline was because of the private credit structure.
“What really stood out with Crestline is, they were willing to come to the table in a private credit-only facility to where our advisors still maintain 100% of the ownership of the units, of the shares,” Hefty said. “As our EBITDA continues to grow, our funding just grows right with it. So it’s not like this is a one-and-done transaction. It’s a partnership that can go on in perpetuity.”
Since launching in 2018, Credent has completed 12 mergers and acquisitions and grown from about $250 million in assets to $2.6 billion. The investment will help fund additional M&A. It also allows the firm to alter its current ownership structure from a heavy equity swap/lower cash option to a higher cash/lower equity swap opportunity.
“It also allows us to work more with advisors with a shorter runway, seeking liquidity for their life’s work but also maybe a permanent exit in two, no more than three years,” Hefty said.
Credent will also now allow advisors to take some chips off the table and sell a minority stake to the firm.
Hefty said they’ll also be able to bring back a shared services platform, Advisor Solutions, which will be powered by Orion's technology, and provides middle- and back-office services to advisors. Prior to 2018, that platform was called Crescendo Max.
“We do not consider ourselves an aggregator. Actually we consider ourselves an ‘anti-aggregator,” Hefty said. “Credent has been put together by its founding group as a forever firm, striving for excellence in investments, planning and service. And we knew in order to achieve that, we would have to not only be able to fully integrate new offices through middle- and back-office support, but to fully assimilate them into the client experience and to have a single client experience that stretches out across our entire network of advisors and teams and everything we do.”
The partnership with Crestline continues that work.
Credent will not sell Crestline funds through the RIA; in fact, maintaining that independence was an important aspect in the due diligence process.
“There were some [investors] where that’s a requirement to access capital. All of those were immediately crossed off the list,” Hefty said. “We want to not introduce those types of conflicts of interest.”
Echelon Partners advised Credent on the transaction.