New York-based Focus Financial Partners announced its fifth deal this year for an advisory firm, this time with Hufford Financial Advisors, an Indianapolis-based RIA firm with $900 million in AUM and 700 clients in all 50 states which focuses on meeting the wealth management needs of small business owners, primarily dentists.
Details of the transaction, which closed on Sept. 30, were not disclosed. But Rudy Adolf (left), the former McKinsey consultant who founded and runs Focus Financial, said in an interview with AdvisorOne on Monday that the Hufford deal was similar to the other transactions that Focus has done. “We’re investing in 40% to 60% of the cash flows of the firm and our new partner runs the business as they have in the past under a contractual agreement, but they can benefit from the economies of scope and scale and expertise that they wouldn’t have had otherwise.”
In addition to these transactions, Focus also facilitates “tuck-in” transactions of smaller firms on behalf of their now 22 partner firms. Just two weeks ago, Focus announced a deal with Boston-based Colony Group.
Brian Hufford, who started a CPA practice in 1977 whose clientele was mostly dentists and then founded Hufford Financial in 1997 to provide more comprehensive investment, savings and tax services, said the Focus deal was the culmination of a five-year process, prompted in part by a common problem faced by many business owners and leaders: “You run into ceilings of complexity” that are a challenge to solve on your own.
“We had several suitors who approached us,” Hufford (left) said in an interview with AdvisorOne on Monday, but with Focus, “what appealed to us was the outside incentive to grow the firm while being sensitive to our business culture—we could grow without dramatically changing the culture.”
Hufford said that mulling over those offers from other suitors led him to the realization that “the easiest outcome for me would have been to just sell the company,” such as to a bank, “but that wouldn’t help clients and staff. I started asking myself how would my staff have a good future? I was concerned that if a large company acquired us, my staff would have become commodities. “We have a great staff,” he said, and that kind of sale “would have felt like a betrayal.”