Acquisition-minded United Capital Financial Partners is ramping up its deal-making. Today it announced it bought Dunn Hogerty Investment Consulting, an independent b/d that reports client assets of $500 million in Fort Collins, Colo. “We’re not done yet,” Chief Executive Joe Duran said in an interview with Registered Rep. Duran said that United Capital expects to announce within two weeks the purchase of another advisory firm with assets of almost $2 billion; United Capital reports assets under advisement of $11 billion.
United Capital isn’t the only one looking to tie the knot. The broader M&A market is picking up, according to Schwab Advisor Services. In the first half of this year, 40 deals were completed, the strongest first-half performance as measured by deal volume since Schwab started tracking the data in 2003.
Terms of the Dunn Hogerty deal were not disclosed. It’s the 31st practice to join United Capital since Duran helped found the firm five years ago. The parent of United Capital Financial Advisers, an RIA consolidator based in Newport Beach, Calif., the firm is looking for advisors with a minimum of $100 million in assets, a focus on client service, and a desire for growth, Duran says. United Capital offers advisors partnerships in the firm, plus support for the back office responsibilities that burden many FAs who go independent. The firm is paying the industry standard for advisory practices, a multiple of three to five times EBITDA, Duran said.
Dunn Hogerty was previously affiliated with Wells Fargo Financial Advisors Network. Thad Dunn, who runs Dunn Hogerty with his father, Jerald Dunn, and Dennis Hogerty, said the partners liked working with FiNet but were looking for an arrangement that provided more flexibility for serving some of their clients who had specialized financial needs, Dunn said. He added, “We really needed to spend more time with clients and less time, frankly, running a business. … Doing things like HR and health insurance and payroll and taxes all inhibited the depth of those relationships.”
Some advisors say Duran’s philosophy of growth resonates with their own. Michael Duncan and fellow advisors sold their RIA practice, DFG Advisors in Ridgewood, N.J., to Duran in February. Duncan, 46, said he was looking to get better pricing on software and asset management services. He also wanted to grow on a larger playing field. “You can do it regionally and you can do it very successfully. I wanted a bigger pool,” he said. “If you have $300 million (in assets) you have a business. If you have less than $300 million, you don’t have a business; you have a practice, and you’re getting commoditized.”
Duran is accustomed to growing businesses. He joined Centurion Capital Management in 1992 when it was a small independent advisor; when it was sold to GE Financial Assurance Holdings in 2001, its assets were in the billions. Today Duran’s firm is backed financially by private equity funds Grail Partners LLC and Bessemer Venture Partners; the firm has no institutional debt, he said. Duran estimates 2010 revenue of more than $40 million, up from $16 million two years ago. Duran hopes to double the figure again in the next two years. The firm is focusing more on strengthening its brand. “Nobody knows about us as an RIA,” he said. “The good news is that will change.”
