DEALQUEST PODCAST – Stan Gregor
M&A Talk with Leading RIA Aggregators and Integrators:
Stan Gregor of Summit Financial
CEO of Summit Financial, Stan Gregor, is a seasoned business leader with over 30 years of experience in various industries including banking, investment banking, insurance, and wealth management. Throughout his career, Stan has been involved in the acquisition and integration of large and complex businesses in these industries. This has led to his history of improving their profitability, performance and returns for shareholders.
A UNIQUE VALUE PROPOSITION
The independent advisor industry has undergone many significant changes in recent years, with many options available out there for advisors seeking a firm that caters to their own specific needs. With Summit Financial, Stan recognized this evolution so he adapted his business strategy to stand out amongst the other firms, while remaining current with the evolution of the industry.
Stan describes Summit's approach as one that combines support, but offers independence. Advisors are given the autonomy to operate their own businesses, in turn providing their clients with the level of service they desire, but they also allow access to a team that offers support and assistance in their day-to-day operations. Furthermore, Summit's partnership model is distinctive and superior, with partners coming together on a regular basis to share their own experiences and act as advisory committees to one another. This culture of collaboration is what sets Summit apart and is a leading valuable benefit for advisors who have been with the firm for an extended period of time.
SUMMIT FINANCIAL: AGGREGATOR? INTEGRATOR?
In the RIA industry, there are two main business models: The aggregator model and the integrator model. The aggregator model is where a company acquires smaller businesses, while operating them separately the only focus is on generating profit and revenue without integrating them into the larger company. In contrast, the integrator model emphasizes on equipping advisors with the necessary resources and tools to work independently, while still having access to the regulatory compliance and technology infrastructure of the larger parent company. Many firms will operate as a hybrid, opting to pick the parts of both models to create an amalgamation that suits their own individual firm’s needs.
Summit Financial would fall under the full integrator model, where they simplify the things that advisors don't want to do, such as having their own ADV, or dealing with technology and compliance. Summit Financial also provides:
An investment team
Insurance agency
Servicing arm to take non-client-facing tasks off the advisor's plate, while still allowing them to use their own brand
The culture of the company is one of collaboration and partnership. Stan holds firm in his belief that if Summit Financial is not adding value to an advisor's business, the advisor should take an exit.
The honesty is appreciated with this approach, as many times in business, the focus can become overly superficial and only emphasizing solely on financial figures without taking the consideration of how the team functions together as a cohesive unit. I agree that a positive company culture is vital, and making sure that everyone is content – so they can excel – should be a top priority.
FLEXIBILITY & COMPANY CULTURE
The approach to flexibility is one of the key components to ensuring Summit Financial stands out in the comparison with other firms. Stan highlights that the company's business model is adaptive and distinctive, allowing firms to maintain their own branding and for employees to come and go as they please. As they have the ability to shape and adapt the company to their specific needs, this approach allows for a more personalized experience for both firms and employees alike.
This approach contrasts greatly with other, larger companies that often make 100% acquisitions, absorbing all aspects of the acquired businesses. With this method of acquisition, the total absorption of the acquired company yields the result of often the loss of identity and culture.
SUPPORTING GENERATIONAL GROWTH
There are countless unique opportunities and challenges that arise when working with second (G2) and third (G3) generation business owners. Stan acknowledges that these individuals may have different interests and goals, with some more interested in growth opportunities while others are looking to cash out sooner.
Through their business model of only buying a minority stake in a business is one of the ways that Summit addresses these challenges. This allows G2 and G3 members to continue to grow and run the business, while still having the resources and support provided by Summit. Additionally, Summit has experience working with G2 members who are loyal to the business but may not have the means to take over the business on their own. In these cases, Summit will make an investment in the seller and also provide financing for the G2 member, allowing them to acquire the business without incurring a significant amount of debt.
Summit's primary focus is on assisting G2 and G3 members grow their businesses organically. Stan emphasizes that they do not aim to make money in the financing aspect of the deal and that their model is designed to be simple and fair. Stan is sincere in his dislike for the "nickel and dime" mentality that is a commonplace in this industry, citing that Summit's approach is meant to be more beneficial and transparent for all involved parties.
THE SUMMIT FUNDING STRATEGY
Regardless of their model, all firms, whether it is a full integrator, a full aggregator, or a hybrid, have their own unique funding strategies. Stan explains that all financing for Summit derives from the personal capital of its partners and that the company does not have any loans from banks or private equity. For larger transactions, Summit will utilize the services of Merchant Capital, of which he is a shareholder.
It is crucial that a firm is financially smart. Stan believes that the most intelligent way to run Summit is by:
Limiting its funding to not include private equity
Limiting its funding to not include loans from banks
Keeping a healthy amount of cash on hand
Avoiding taking excessive risks
Summit being in business for 40 years has proven this strategy to be effective which Stan believes could only be achieved by being financially savvy.
For my full discussion with Stan Gregor, and more on the topic:
Listen to the Full DealQuest Podcast Episode Here
FOR MORE ON STAN GREGOR & SUMMIT FINANCIAL:
https://summitfinancial.com/
https://summitfinancial.com/team-members/stan-gregor/
https://www.linkedin.com/in/stan-gregor-2113465/
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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