M&A Talk with the Leading RIA Aggregators and Integrators: Matthew Cooper, Beacon Pointe Advisors

There are many impressive things about Matthew Cooper. In addition to being featured in Forbes Magazine, he was named a finalist for “Individual Thought Leader of the Year” for the 2019 WealthManagement.com Wealthies Industry Awards, and he was the winner of “M&A Leader of the Year” for the 2022 WealthManagement.com Wealthies Industry Awards. But, 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.

Join me on the DealQuest Podcast, and the first guest of my RIA series, Matthew Cooper of Beacon Pointe Advisors.

The RIA industry wasn’t Matt’s first business calling. As a matter of fact, after graduating from college, he entered 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.” Since he was the one to work out deals when a client’s loved one passed away, he had an early start at dealmaking. Through this early education in dealmaking, Matt took that knowledge and built Beacon Pointe into what it is today, a remarkable RIA powerhouse firm and acquirer.

  • 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. That changed when they 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 believed. Not only did the M&A RIA start to grow 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 thing might come crumbling down like a house of cards in a downpour. Matt took on the challenge, recognized the opportunity, and decided to bring in a capital partner to help the firm evolve.

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 lot of heavy lifting through Beacon Pointe. To make even one successful deal — let alone the volume and caliber of deals Matt makes — it takes a great deal 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 reduce confusion about potential targets when there are so many options and choices available these days in the RIA space. To help mitigate confusion, Matt constructed a consistent story in the marketplace regarding Beacon Pointe’s all-wealth approach. This allows the various teams across the U.S. to have the flexibility and speak with their own voices while remaining on agenda with Beacon Pointe’s strategy.

Matt’s approach to dealmaking is very people-oriented, so it really is about how well people within his firms get along, so he has three pillars he focuses 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. Because of the need for cash flow at the time, Beacon Pointe’s first nine deals featured a 100% equity swap, but 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 positive or negative. Some of the attributes of bringing in majority investors:

  • Founders can build their company to be a bit self-operating in that 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 with them, 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 significant part of the debate between aggregator versus integrator models is not only the route to the end goal but also the type of clientele you’re aiming to attract to your business while avoiding wasting time on deals that won’t 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. Those within that target range are the best prospective firms to whom Beacon Pointe can bring the most value in the future. Other attributes Matt seeks in potential firms:

  • An earnest desire to be a planning-first type people, 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 intention is 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 intention should always be to create your structure to be attractive to the people that want to be involved. If you’re not projecting yourself in an appealing manner, you’re 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 satisfies all involved.

IT’S ALL ABOUT GROWTH

Growth does not only refer to the expansion of your own business, nor just 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 the market is expanding despite the consolidation caused by the aggregators and integrators. Whether you’re an aggregator or integrator, or you lie somewhere in between or 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 healthy competition combined with increasing options for all 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.

FOR MORE ON MATTHEW COOPER AND BEACON POINTE ADVISORS:
https://www.linkedin.com/in/mattcooperbpwa/
https://www.beaconpointe.com

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.

If you want to find out how deal-ready you are, take the Deal-Ready Assessment today!

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store
Corey Kupfer

Corey Kupfer is an expert strategist, negotiator and dealmaker with 35+ years of experience. He is also the creator and host of the DealQuest Podcast.