DEALQUEST PODCAST – Matthew Cooper
M&A Talk with the Leading RIA Aggregators and Integrators:
Matthew Cooper, Beacon Pointe Advisors
Matthew Cooper has many accomplishments under his belt. He has been featured in Forbes Magazine, was a finalist for the “Individual Thought Leader of the Year & for the 2019 WealthManagement.com Wealthies Industry Awards and was the winner of “M&A Leader of the Year” for the 2022 WealthManagement.com Wealthies Industry Awards. Overall the most meaningful to Matthew is the business that he is a Founding Partner and President of, Beacon Pointe Advisors, one of the U.S.’s most successful RIA firms with locations spanning all over the country.
The RIA industry was not Matt’s first business calling. Following his college graduation, Matt began his career in the life insurance industry. Nevertheless, life has its turns, and that life insurance firm branched out into the RIA arena and, as Matt says, “Here we are.” Matt was responsible for working out deals when a client’s loved one passed away and this gave him an early start at deal making. Matt took the knowledge he had through his early education in deal making and built Beacon Pointe Advisors into what it is today, a remarkable RIA powerhouse firm and acquirer. Beacon Pointe Advisors has:
● 13,000+ clients
● 375+ on staff nationwide
● 220+ Designations and Certifications including CFA, CFP®, JD, MST
● Since March 2020 -- after bringing in Beacon Pointe’s first capital
partner -- completed 24 successful transactions
BRINGING IN A CAPITAL PARTNER
For nearly 20 years, Beacon Pointe had no capital partner. This changed when the company took on two underlying RIAs – one expressly for the inorganic growth side of the business – and discovered they weren’t as aligned as they had originally believed. Not only did the M&A RIA start to grow much larger than the other RIA, but several veteran shareholders were looking to exit and cash out. This misalignment paired with the timing of shareholders wanting to exit, caused Matt to see the natural need to bring in outside capital and merge the two RIAs together.
Alignment is extremely critical in M&A; if one facet is out of sync, the entire existence might come crumbling down like a house of cards in a downpour. Matt took on the challenge, recognizing the opportunity, and decided to bring in a capital partner to assist the firm in evolving.
Choosing the right capital partner can:
● Help you strategically
● Offer your business more value
● Lessen potential risks
● Accelerate growth
For Matt and Beacon Pointe, the right partner was KKR & Co.
IT’S NOT A HOBBY
As a dealmaker, Matt has been doing a great deal of heavy lifting through Beacon Pointe. To close even one successful deal – let alone the volume and caliber of Matt’s deals– it takes a great amount of knowledge, tenacity, and dedication. Matt emphasizes the importance of dealmaking as a conscious exercise; “It’s not a hobby,” he adds. Nothing could be truer.
For Matt to make such effective deals at the volume he does, he has a process that he sticks by:
● Keeping his mindset sharp on the deal, remembering “it’s not a hobby”.
● Having teams built and in place: one team to source the potential deals, do due diligence, and then build the LOI.
● Following the LOI, an integration team performs further due diligence and remains on-task post-close until the firms are fully integrated.
● Having all the department heads at Beacon Pointe be a part of the whole process.
● Knowing when to push, and when to ease up in the deal-making process.
FULLY INTEGRATED MODEL TO SERVE CLIENTS As previously discussed in episode 199 of The DealQuest Podcast, there’s debate within the M&A RIA space about aggregators versus integrators. Beacon Pointe is squarely on the fully integrated model side. This means:
● One brand
● One ADV
● One tech stack
● One company culture
The goal, whether you’re an aggregator or an integrator, is to limit confusion about potential targets with so many options and choices available these days in the RIA space. To help mitigate confusion, Matt has constructed a consistent story in the marketplace regarding Beacon Pointe’s all-wealth approach. This allows the numerous teams across the U.S. to have the flexibility and speak with their own voices while keeping on the agenda with Beacon Pointe’s strategy.
Matt’s approach to dealmaking is very people-oriented; this shows the importance of how well his people within the firm get along. Matt has three pillars he continues to focus on with Beacon Pointe:
● Access to institutional quality investments
● Life and legacy planning
● Impact initiatives
EQUITY-FORWARD AND MAJORITY INVESTORS
Another feature of Beacon Pointe’s integrator model is being equity-forward and doing only majority investment deals. Due to the need for cash flow at the time, Beacon Pointe’s first nine deals featured a 100% equity swap, going forward they now prefer to keep the equity between 20% and 60%, with the sweet spot for a typical deal being the high-30% range. These percentages result from the fact that equity is the most expensive consideration for them, however, equity is generally a very attractive incentive to investors, as the higher multiples and growth rate of Beacon Pointe help create greater enterprise value for all.
Depending on your goals and expectations, bringing in majority investors can be viewed as a positive or negative. Some attributes of bringing in majority investors can be:
● Founders can build their company to be a bit self-operating in which they can take a break from the daily operations by sharing responsibility with majority investors.
● Sometimes new ownership can add a fresh perspective, which might be precisely what a business needs to be reinvigorated.
● Each investor is likely going to have a series of people they trust on their end. They may very well want to bring those people in, which will offer a fresh perspective and expertise that you may not otherwise have had access to.
● For founders, a surface-level concern is the need to give up control to majority investors, however, Matt prefers to see and present it as giving a little to gain a lot in the long run.
ATTRACTING THE RIGHT CLIENTS UNDER A FULLY INTEGRATED MODEL
A major part of the debate between aggregator and integrator models is not only the route to the end goal, but also the type of clientele you are aiming to attract for your business while avoiding wasting time on deals that will not function well with your model. Beacon Pointe targets firms with assets ranging from $3 million to $2 billion for Beacon Pointe’s fully integrated approach. Beacon Pointe can offer the most value in the future to firms who fall within that target range.
Other attributes Matt seeks in potential firms:
● An earnest desire to be a planning-first type of person, or driven to get a planning-first attitude
● Those looking to not make a quick exit but remain for the long term; be it five, ten, or fifteen years. Their intentions are to make those upcoming years more prosperous than the previous.
● Those looking to be proactive and active in building a solid long-term operating company for the clients
● Primarily standalone RIAs versus wirehouse or IBD advisors.
The main intention should always be to create a structure to be attractive to the people that want to be involved. If you are not projecting yourself in an appealing manner, you are not going to garner interest, pure and simple. Beacon Pointe’s approach is to ensure that equity is split all around to achieve a long-term outcome that will satisfy all involved.
IT’S ALL ABOUT GROWTH
Growth can mean so much more than just referring to the expansion of your own business or your own personal achievements. The M&A RIA space has undoubtedly evolved and changed over the past decades. Currently, more RIAs are being founded than are being absorbed, so despite the consolidation caused by the aggregators and integrators the market is still expanding. Whether you are an aggregator or integrator, you lie somewhere in between, or are considering selling to one, you are part of a natural maturation of the RIA space that will continue for some time. One of the many elements that enable this industry to continue to expand and flourish is the healthy competition combined with increasing options for all that are involved. We appreciate Matt giving us further insight into Beacon Pointe, one of those quality options, and his view of the RIA industry and the deal market in general.
Listen to the Full DealQuest Podcast Episode Here
FOR MORE ON MATTHEW COOPER AND BEACON POINTE ADVISORS:
https://www.linkedin.com/in/mattcooperbpwa/
Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.
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