Mercer Global Advisors announced its first big M&A deal in 2016, when it merged with Houston-based Kanaly Trust, adding trust services to Mercer’s wealth management offerings. Since then, the Denver-headquartered RIA has completed 100 deals, with the acquisitions this week of Tufton Capital Management, a $810 million AUM RIA in Hunt Valley, Md., and Lewis Wealth Management, a Denver-based RIA with about $75 million in AUM.
Over the last nine years, Mercer has solidified its place as one of the most active acquirers in the industry, using its “integration—not aggregation—model” to attract potential partners. But CEO Dave Welling says the firm spent 30-plus years before that building its foundation, focusing on organic growth and centralizing certain functions.
“We had figured out how to balance what resources to share and centralize and how to also empower the local advisor, the local team to make choices in their local market and drive their strategy in the local market,” Welling said.
For example, the firm has strong centralized estate and tax planning teams. It also has investments that are centralized from an operational and management perspective and decentralized in the sense that advisors can customize portfolios as needed.
“As we stepped into M&A in 2016, our integrate, not aggregate, approach was pretty novel,” he said.
At that time, Welling estimates there were only five or six financed buyers in the RIA marketplace, most of whom were doing pure aggregation. Today, there are 40 to 50 buyers.
“Our approach of integration, which is really about how can we deliver more value to the client, how can we deliver more value and opportunities to the team that’s joining us and how can we better position ourselves to grow organically, the idea of sharing resources, providing access to the teams that we’ve already built, are huge parts of why people make these decisions,” he said.
Today, Welling considers Mercer a national firm, with 110 offices across the country, clients in every state and $71 billion in total assets. It has a presence in 40 different markets.
Some 40% of Mercer’s nearly 1,300 employees joined via M&A, and 620 of those employees, including client-facing advisors, are equity owners in the company.
The acquisition of Tufton expands Mercer’s footprint in the Washington, D.C., market, bringing it to $3 billion in client assets in the region. The firm, which was founded in 1995, is run by owners Chad Meyer, president and managing partner; Scott Murphy, portfolio manager and partner; and Eric Schopf, portfolio manager, partner and director of research.
The addition of Lewis Wealth Management expands Mercer’s presence in Colorado, where it has nearly $5.5 billion in assets across eight offices and more than 160 employees. The RIA is run by Austin Lewis, a solo practitioner who provides financial planning to 40 clients.
Mercer has been building out its M&A team for the last couple of years. It recently hired Ted Motheral, a former corporate and M&A partner at Potomac Law Group, as principal of M&A partner development. He serves alongside Martine Lellis, who was promoted into the same role a year ago. That position was created out of a need to handle the firm’s growing pipeline of RIA acquisition targets. In October, Lellis also took over the responsibilities from Dave Barton, vice chairman of M&A at Mercer, who retired to focus on an ongoing health issue.
Early last year, the firm added five new executives to fill out its M&A partner development and integration teams. These executives were all tasked with bolstering the firm’s inorganic growth strategies.
Mercer is majority owned by Oak Hill Capital, Genstar Capital and Altas Partners.