Published on https://www.familywealthreport.com/ on April 7, 2025, Authored By, Tom Burroughes
Wealth Firms Need "Matchmaking" M&A Model To Ensure Success – Harmony
Tom BurroughesGroup EditorApril 7, 2025
We talk to an advisory firm, Alaris Acquisitions. Its CEO and founder says he adopts a particular approach to lining up potential parties in wealth management M&A transactions.
As the wealth sector M&A carousel has continued to spin, a question naturally arises as to how well, or not, these corporate transactions work out? Do they achieve blissful harmony or acrimony?
Perhaps, given the natural bias of people to search for “bad” news rather than the positive, deals that don’t appear to work out gain more attention. (See an example here.)
A specialist in these transactions who thinks he has hit on a formula for success is Allen Darby, CEO and founder of Alaris Acquisitions. He argues that the “matchmaking” model makes most sense in a sector where cultural fit and not just hard numbers is what drives success.
In traditional M&A auctions, sellers send messages to multiple buyers and invite them to participate. Darby told Family Wealth Report in a recent call that he deems this process inefficient and unsuitable for the wealth management industry.
“The biggest hurdle to post-acquisition success is not fully grasping the buyer’s must-have points of alignment – what they’ll require the seller to do, change, or adopt as part of their team,” he said. “The auction process is the main culprit here, zeroing in on numbers as the sole measure of fit, ignoring compatibility –especially the buyer’s expectations.”
“When a seller can clearly outline the decision-making areas, they’ll need to relinquish as part of the buyer’s team – and the buyer confirms those assumptions – that’s a strong signal of alignment,” Darby continued. “It’s even better when the seller can pinpoint the new processes and procedures they’ll be expected to adopt. Best of all, when the seller can describe the growth expectations the buyer holds for them – and that the buyer is likely to assume they’ll meet – it’s a clear sign of a well-matched partnership.”
Darby’s firm, founded in 2020, appears to be busy, with more than 90 closed acquisitions mentioned on its website. There are more than 67 buyers on its roster. Alaris describes itself as “collaborators” on a firm’s M&A team, being invested in the results of buyers and sellers. This, so the firm says, removes biases.
On its “roster” are firms such as Carson, Savant Wealth Management, Cerity Partners, Edelman Financial Partners, Mariner Wealth Advisors, Hightower, Apollon Wealth Management, Beacon Pointe, Steelpeak and Modern Wealth, among others.
A rising trend
North American mergers and acquisitions continued to increase in number last year, with deals such as the UAE-backed purchase of CI Financial, and Bain Capital’s acquisition of Envestnet, among the stand-outs. Average assets per transaction fell slightly from $1.7 billion in 2023 to $1.4 billion in 2024. There were 11 transactions involving more than $100 billion in AuM – a record. Among deal examples in 2024 was the Hightower Advisors’ purchase of NEPC; TPG’s acquisition of Creative Planning; KKR’s purchase of Janney Montgomery Scott; and the BlackRock, JP Morgan Asset Management deal with Dynasty Financial Partners. Other deals included the Allianz X, Constellation Wealth Capital deal with AITi Tiedemann, and the Pathstone/Hall Capital Partners transaction.
Darby said his own background gives him a close understanding of what works in M&A and what doesn’t. He led outbound M&A activities at United Capital from 2012 to 2019, sourcing more than 30 acquisitions, culminating in United Capital’s sale to Goldman Sachs. Darby founded a firm helping accounting firms enter wealth management, which he later sold to First Global. Darby also founded Centermark Accountants and consultants in Charlotte, North Carolina, closing nine M&A deals before selling the practice in 2009.
How it works
Armed with extensive data about buyers in the industry, Alaris, after organizing the sellers' quantitative and qualitative data, runs two-way compatibility screens. These ensure that only buyers who should be at the table are invited to the process. Alaris creates a curated list of compatible buyers, generally limited to three to five firms, ensuring that each buyer is a viable fit for the seller.
Darby said this tightened, curated list fosters more meaningful and focused negotiations, leading to better overall outcomes.
The outcomes prove that this approach works, Darby said. Sellers who have worked with Alaris have said that they would choose to work with the firm again if given the chance, he said.
Crucially, it is vital for sellers to clearly understand the full scope of what will be required of them post-closing.
Sellers are essentially giving up some degree of autonomy in the deal, but this varies depending on the buyer's model, Darby said.
There are six main decision-making factors the sellers need to determine what they wish to keep versus what they are ok to divest: Strategy; finances; staffing; client experience; calendar; and growth profile.
Real growth
Darby stresses the need to differentiate between a firm’s organic growth and the market's growth. If a firm’s growth is driven mostly by market performance rather than internal growth, the firm’s actual growth may be minimal or even negative once market changes are accounted for, he said.
“Sellers must understand what a headline offer is compared to the base offer. Headline offers can be deceiving and unrealistic. Knowing what EBITDA [earnings before interest, taxation, depreciation and amortization] is and how it is being calculated is just as important as what the multiple applied to EBTIDA is,” he said. “Sellers often realize that lack of interest in growth directly affects their company’s valuation.”
Trends
Darby said firms are increasingly buying businesses to create “one-stop shops” that offer comprehensive services, from investment to accounting and financial planning. This trend is driven by the question about “What can we surround the client with?” he added.
To illustrate this trend, in 2024, Cerity Partners acquired FB&D LLP, an accounting firm for high net worth clients, while F L Putnam bought Darwin Trust Co.
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