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Peter Mallouk

Industry Spotlight > Mergers and Acquisitions

Creative Planning Buys Silicon Valley RIA Serving Tech Execs

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What You Need to Know

  • The addition of Emery Howard expands Creative Planning's footprint in the San Francisco Bay area.
  • San Francisco is Creative Planning's fastest growing market in the country, CEO Peter Mallouk says.
  • Emery Howard also has experience advising tech industry executive clients, which is an additional plus.

Overland Park, Kansas-based RIA Creative Planning acquired Emery Howard, an RIA based in Burlingame, California, with over $1.8 billion in assets under management, Creative Planning said Tuesday.

Emery Howard has been focused on providing high net-worth clients with customized management services since 1991. Its clients have included technology industry executives who have helped fuel the “innovation and explosive growth” of nearby Silicon Valley, according to the Emery Howard website.

Asked in a phone interview what he found attractive about Emery Howard, Peter Mallouk, Creative Planning CEO and president, told ThinkAdvisor: “San Francisco is actually our fastest growing market in the country.”

Creative Planning has offices throughout the area and had about 15 advisors there prior to the Emery Howard acquisition, he said, noting the latest addition boosts its count in the market by another six people, most of them advisors.

Creative Planning has been “aggressively hiring talent” in the market in the past year and “this was a great way to acquire an office” near Silicon Valley that had “very experienced talent used to working with very affluent tech executives,” he explained.

The Emery Howard team also “matches our investment philosophy [and] our culture so all those things put together made this one an easy decision,” he told ThinkAdvisor.

Emery Howard’s team also shares “our planning-led approach,” he said, adding: “What’s different is it [is in] the area that we’re growing faster than anywhere else.”

Emery Howard was looking to align with a firm that had “outstanding investment and planning capabilities and that would provide operational scale to allow our team to focus exclusively on client relationships,” according to Michael Howard, its president.

“Peter Mallouk and the Creative Planning team have given us tremendous resources to provide a greater offering in a holistic and comprehensive way,” Howard said in a statement. “Peter has created a culture, value system and investment philosophy that has been very consistent with what we developed over the decades and the independence to operate as we always have going forward.”

More Deals to Come

The acquisition closed at the end of 2021, Mallouk said, declining to say how much his firm paid. DeVoe & Co. served as financial advisor to Emery Howard on the deal.

With its latest acquisition, Creative Planning now manages over $134 billion and advises on $91 billion in assets across all 50 states and 65 countries with continued plans for growth throughout 2022, it said.

The deal was announced less than one month after Creative Planning said it acquired The Doman Group, an RIA based in New York City with $400 million in AUM. That deal was announced one month after Creative Planning said it acquired Des Peres, Missouri-based Paradigm Financial Advisors, an RIA in the St. Louis market with more than $600 million in AUM.

There are other firms that Creative Planning recently acquired but has yet to announce, Mallouk told ThinkAdvisor.

“We don’t have a target” for how many M&A deals it plans for 2022, he said, explaining: “For us, it’s just does it match philosophically and include the talent that we need to compete in any given market.”

He added: “I think we’ll do less deals in 2022 but there may be a couple that are just bigger than we’ve done in the past possibly.”

Valuations Slow Down

It had “felt like every six months for the last three years [that] RIA valuations grew a little bit,” Mallouk said of the overall RIA M&A market. But “I’m not seeing that anymore,” he told ThinkAdvisor.

“What I’ve seen is a leveling of that, and it’ll be interesting to see does it stay level or does it start to soften as interest rates go up and things like the marketplace dynamics change a bit,” he explained.

He largely chalks the trend up to “so much activity at the end of last year [that] I think a lot of people used a lot of their dry powder up.”

After two years of valuation expansion, “the question became how much more could it go?” he noted, saying it’s “not too dissimilar from the stock market,” where growth stocks’ valuations have kept expanding.

Then there was a “pullback and leveling off,” he explained. “I think that you’ve got competing trends. On the one hand you have more consultants” and 5-10 major players, and “you’re seeing a huge amount of activity from those” firms, he said.

“That would drive a lot of valuation pressure upwards but you’re also seeing more and more firms wanting to join a larger firm, to expand their offering, to institutionalize their practice, to become more competitive in their local market to provide for succession planning,” he added.

At the same time, we have the “financial dynamics of the cost of capital to do these deals and to the extent that goes up, I think that’s the tipping factor,” according to Mallouk. “I think if rates go up 2, 3% — I’m not saying they will — but if that happens, I think you’ll see this slow down in a way many people don’t expect.”

(Pictured: Peter Mallouk, CEO of Creative Planning)


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