Warren Averett grew to become the most recent accounting agency to obtain capital from a non-public fairness or funding agency, however on this case the cash will go to the agency’s asset administration subsidiary, which hopes to make future offers with different CPA corporations to amass their wealth administration practices.
Warren Averett CPAs & Advisors, a High 40 accounting agency primarily based in Birmingham, Alabama, introduced final week that its subsidiary, Warren Averett Asset Administration (WAAM), entered right into a strategic partnership with Wealth Companions Capital Group, a monetary providers holding firm primarily based in Palm Seashore, Florida, and HGGC, an funding agency primarily based in Palo Alto, California. Beneath the deal, the administration workforce of WAAM will stay “significant shareholders” whereas the dad or mum firm, Warren Averett CPAs & Advisors, will retain a minority stake in WAAM. The precise monetary phrases of the deal weren’t disclosed.
In latest months, numerous accounting corporations have introduced investments from non-public fairness and different funding corporations (see story). Probably the most distinguished deal concerned EisnerAmper, a High 20 Agency that introduced in August it had acquired a “vital” funding from TowerBrook Capital Companions, and would break up off its non-attest enterprise into an entity referred to as Eisner Advisory Group (see story). Then in September, a High 100 Agency, Schellman & Co., introduced it had acquired funding from Lightyear Capital and would arrange an entity referred to as Schellman Compliance to supply non-attest providers. A non-audit accounting advisory agency, CFGI, additionally introduced an funding in September from CVC Capital Companions after receiving earlier funding from the Carlyle Group again in 2018.
In Warren Averett’s case, Warren Averett Asset Administration has been round since 1999 as an entirely owned subsidiary. WAAM is already a registered funding advisor that gives wealth administration providers to purchasers together with excessive web value people, households, company retirement plans, trusts, endowments and establishments. WAAM has grown to $4.three billion of property beneath administration. The capital infusion from WPCG and HGGC will allow WAAM to proceed with its natural progress in addition to growth via mergers and acquisitions, maybe with the asset administration practices of different accounting corporations. WAAM CEO Josh Reidinger instructed Accounting Right now there can be no change on the CPA agency degree. “We weren’t in search of only a monetary investor,” he stated. “We wished someone that was really our companion and simply the best high quality individuals.”
The agency wished to double the scale of its wealth administration apply to round $10 billion in property beneath administration, in line with Warren Averett CEO Mary Elliott, partially by buying smaller wealth administration practices, however it wanted the additional funding to try this as a result of merely borrowing cash from lenders wouldn’t go far sufficient. “We started in search of an investor to assist us do this,” she stated.
She and Reidinger mentioned a cope with Wealth Companions Capital Group managing companion John W. Copeland. “We talked about our values and our tradition and what we wished to occur for our purchasers sooner or later, which meant higher know-how, probably extra assets, simply quite a lot of issues,” Elliott defined. “John’s group has a background of working with wealth administration corporations, and all of us 100% agreed that we would have liked to maneuver ahead.”
Copeland was impressed with what he heard. “Once we first obtained launched to Josh and his workforce, which was most likely eight or 9 months in the past, what we noticed was an extremely nicely managed enterprise dedicated to consumer service,” stated Copeland. “Josh and his workforce do the whole lot the appropriate manner. It’s fiduciary, it’s consumer centric, it’s planning led and planning first, and it’s price solely. Josh and the administration workforce actually had a need to take what they constructed and say, ‘We expect we may also help extra individuals and provide it to extra purchasers, notably purchasers who perceive our CPA background.’ What obtained us notably excited was the power to take what’s a terrific service mannequin, a consumer orientation, and ship it to extra people.”
The opposite backer, HGGC, will put money into WAAM via a not too long ago shaped holding firm referred to as Aspire Holdings devoted to investing within the wealth administration house. The transaction is anticipated to shut by the top of the fourth quarter. “We’re delighted to companion with WAAM and WPCG to put money into a number one wealth administration platform with a client-centric method,” stated HGGC companion Neil White in a press release. “We look ahead to supporting administration’s long-term worth creation and progress aspirations.”
WAAM is planning to amass the asset administration companies of different CPA corporations. “We see an amazing alternative to assist different RIAs, particularly these which can be linked with CPA corporations, to exit and to do it extra,” stated Reidinger. “There’s this distinctive alternative that has offered itself within the market proper now for different RIAs which can be a part of CPA corporations to increase. Our imaginative and prescient is to hopefully join and have interaction with different RIAs throughout the Southeast and perhaps even broader, for these which can be particularly oriented to CPA corporations. Mary and I’ve had conversations alongside these strains and we share that imaginative and prescient. We actually suppose that Wealth Companions and HGGC may also help us execute that and proceed to essentially develop this enterprise.”
Wealth Companions plans to assist WAAM in increasing its wealth administration and registered funding advisor apply, maybe by investing in different accounting corporations. “What Josh and I talked about within the early days was there have been numerous CPA corporations on the market which have dabbled in wealth administration, however they most likely don’t both have the inclination or the power to put money into it the best way you’ll want to when it comes to infrastructure, know-how, software program or operational platforms to essentially ship better of breed to the consumer,” stated Copeland. “And so our considering was Warren Averett Asset Administration has finished that. Can we take this mannequin and go to the corporations and say, ‘Look, you’ll have a fledgling wealth administration operation. You will have a few individuals in your workplace that do wealth administration. Can we aid you do it higher and serve your purchasers higher?’ We expect, completely other than the CPA mannequin, these are wealth administration companies embedded in CPA corporations, and we are able to go to these people and say, ‘Look, you don’t have to speculate. We’ve finished the investing. Why don’t you come be a part of us? And we expect we are able to ship all that now we have to your purchasers?’ For us that was actually fascinating. Wealth Companions has made just a few investments with completely different RIA corporations, all of which we expect are greatest at school of their silo. We solely have three or 4 partnerships, however all of them are typically very particular round a mannequin or a thesis. And the thesis right here is the CPA mannequin, though frankly it’s broader than that too. We’re clearly wanting broadly at advisors and RIAs.”
Reidinger distinguishes Warren Averett’s association from the EisnerAmper cope with TowerBrook Capital Companions. “We’re very conversant in what EisnerAmper did, and that’s on the CPA agency degree and throughout their whole group,” he stated. “And whereas that’s fascinating, that’s not what now we have right here as a result of on the CPA agency it’s enterprise as standard. There are not any adjustments, there’s no infusion of capital or an funding from anybody, a lot much less a PE group. That is strictly inside Warren Averett Asset Administration, which is a subsidiary or has been a subsidiary up so far. HGGC, within the pure sense, is a non-public fairness group, however they’re actually completely different within the sense that they’re much longer-term capital. They’re very affected person. They’re very lengthy. It’s not like we’ve obtained this brief fuse with a PE group and it’s obtained to show tremendous quick. I’d describe a part of what’s been so fascinating with Wealth Companions and HGGC is a extremely long-term dedication to 1 one other for a long-term funding right here, so this isn’t some fast flip.”
The CPA agency facet of Warren Averett will proceed to have a relationship with WAAM and their mutual purchasers. “We have now a really sturdy relationship with wealth administration, Joshua’s group,” stated Elliott. “We serve our purchasers. A variety of our purchasers are the identical purchasers. We serve them collectively and we’re going to do this going ahead. That’s not going to vary in any respect. We are going to proceed to serve our purchasers collectively and have a detailed relationship.”