Savant Capital's principals pose following Savant's merger with The Monitor Group in 2012.

Savant Capital Management has closed on its third acquisition of a fellow RIA firm over the past 17 months with the purchase of Orion Capital Management of Winnetka, Illinois. 

With the April 30 addition of Orion Capital’s $150 million in client assets, Rockford, Illinois-based Savant’s total AUM has risen to nearly $4.5 billion. As for future acquisition plans, Brent Brodeski, Savant’s CEO, said “we’ve got another one in the works,” and as for Orion, the plan is to “grow it to $500 million over the next three to five years.”

Brodeski declined to provide specific financials around the acquisition, but similar to Savant’s other deals, there was a cash payment to Orion’s owner, James Kyle, based on a multiple of Orion’s EBITDA, along with a note and an earnout period. Kyle also received “some units of Savant LLC” so “he has skin in the game,” Brodeski reported. “The economics are favorable to Jim,” he said, and there are “significant incentives” to grow Orion’s business post-acquisition.

While that’s a similar structure to other RIA acquisitions, Brodeski points out that the key to the deal was to “lock in the next generation of advisors,” so that two younger advisors at Orion, Michael Denten and Steve Cummings, “bought into Savant” as part of the acquisition.

Brodeski says Kyle was “looking for a succession plan” but also wanted to “stick around for a few years,” so Savant’s deal was attractive. “There are not a lot of great solutions out there from a succession planning viewpoint in the industry,” said Brodeski, and it’s also difficult to find good advisors for a growing firm like Savant, so “if you can’t hire top talent, you have to buy it.”

Orion was attractive to Savant, despite it being “very picky” about the acquisitions it makes, because the two firms were “culturally aligned” and shared “a common vision,” Brodeski said.

“Rollups do federations of firms, run independently,” he said, referring to rollup acquisition firms like Focus Financial, but Savant’s vision is “not becoming a financial investor in a firm but creating one firm,” sharing a common name but using the better technology, marketing and overall support of a larger firm in order to “create really good leverage” for the advisors in Savant, which has nearly 130 employees. “We want our advisors to advise,” he said. “That’s the vision.”

There are benefits for the clients of Savant-acquired firms as well, Brodeski argues. Orion was more investment-centered than financial planning-centered, but “at the core of what we do” at Savant is “holistic financial planning, integrated wealth management,” Brodeski said, including estate planning, a “robust” financial planning process and even the ability to do clients’ taxes in house, providing “enhanced value to clients.” He joked that “in the industry we like to think we have all of our clients’ assets, but we never do,” so by providing that broader range of services, Savant is expecting “a greater share of clients’ wallets and more referrals.”  The Orion acquisition also fits into Savant’s marketing plans. Brodeski points out that Orion has an office on the “North Shore of Chicago; that’s where the money is,” and Savant also has “some clients in that area, so securing an office there will be helpful for our existing clients.”

Returning to his theme about what makes Savant different as an acquirer, Brodeski said that for financial buyers of RIA firms, “it’s all about financial engineering. For us, yes, we want [acquisitions] to be financially accretive, but it’s about acquiring talent and growth opportunities. We’re not just looking to buy books of business.”

Nor is Savant interested in advisory firms where the principal wants to “go into the sunset.” Such a situation “makes the risk higher for everybody,” Brodeski said. “What’s unique about all these deals is securing an existing owner who’s looking to stick around for five years, or maybe 10-15 years.” That lowers the risk for Savant, increases “continuity with clients” and gives the owner a “chance to mentor the next generation. Lots of gray-hairs want to do that, but don’t have the platform.”

Before Orion, Savant’s most recent acquisitions were of Naperville, Illinois-based Paragon Advisors, also an $150 million AUM firm, in January 2014, and Green, Plagge and Shaw, a St. Charles, Illinois-based tax and accounting firm.

For advisors considering their exit or succession plans, Brodeski says it all depends “on what you want to do. If you want to be the chief cook and bottle washer, you’re not for Savant. Stay on your own.”

Brodeski and Savant have written a free white paper on succession planning available on Savant’s website.

— Check out 6 Secrets to Becoming a Billion-Dollar RIA Firm: aRIA on ThinkAdvisor.