FIDELITY LAUNCHES NEW PROGRAM TO HELP INDEPENDENT ADVISORS GROW THROUGH MERGERS AND ACQUISITIONS
Announces Strategic Alliance with Live Oak Bank to Offer Financing Options
BOSTON, June 11, 2013 — Fidelity Institutional Wealth Services, a division of Fidelity Investments®, today unveiled a new program designed to help registered investment advisors (RIAs) plan and execute mergers and acquisitions (M&A). This comprehensive offering includes the three components that advisors need to successfully execute an effective M&A program: insights and education regarding M&A strategy, connections to firms that are looking to buy another firm or be acquired and access to financing.
According to a 2011 Fidelity studyi, within the next three years, nearly two-thirds (63 percent) of RIAs that participated in the study would consider acquiring another firm, while more than one-third (38 percent) of the participating advisors would consider merging with another firm. Fewer — just 16 percent of the participating firms — were interested in selling their firms.
“While many RIAs are interested in M&A, the pace of deals has not been commensurate with the interest we’ve seen from advisors,” said David Canter, executive vice president and head of practice management and consulting at Fidelity Institutional Wealth Services. “We believe that is largely due to the lack of organizational focus, tools and third-party support needed to facilitate M&A — so we’ve designed a program that combines those factors with the financing needed to implement a deal.”
Through a strategic alliance with Live Oak Bank, Fidelity is providing its RIA clients access to discounted pricing on loans and a dedicated servicing team that can help streamline the loan acceptance processii. Live Oak Bank is a small business lender and can provide financing to certain advisors for loans up to $5 million. In addition to providing loans for
mergers and acquisitions, Live Oak Bank will also offer loans for internal succession plans and for breakaways.
“We chose to align with Fidelity because of their commitment to the RIA business and the comprehensive M&A program they’ve implemented,” said Chip Mahan, CEO of Live Oak Bank. “We’re thrilled about the opportunity to collaborate with Fidelity, and to help support its clients’ growth.”
According to research firm Cerulli, those firms that participate in mergers and acquisitions are more likely to achieve scale, which can significantly reduce costs. Also, those firms with access to capital, either via private equity or a banking affiliation, are leading the transactions in the industry.iii
In addition to financing through Live Oak, Fidelity offers advisor access to special pricing from M&A consultants who can assist them in navigating this process. Fidelity’s program also provides the connections and insights advisors need to design strategic M&A programs:
• In-person workshops and events – a series of client events Fidelity hosts throughout the year with workshops, as well as networking opportunities focused on M&A. Advisors can benefit by meeting potential transaction partners, including prospective sellers, as well as gaining access to M&A specialists in the RIA space.
• RIA Match – a third-party owned and operated website that matches financial advisors who want to buy, sell, merge or join practices. Fidelity maintains a relationship with RIA Match whereby it acts as the exclusive custodian to provide content, participate in webinars, and arrange for its clients to contract with RIA Match for services at discounted pricing.
Education & Insights
• Expanding Your Practice – a series including a guide, workbook, white paper and checklist that offers a step-by-step approach to help advisors assess their readiness for a potential merger or acquisition. Based on interviews with recognized RIA M&A specialists, the series looks at what firms need to have in place to be viewed as a “viable buyer,” including a well-defined business strategy, a scalable structure and the resources to complete a deal.
• Seize Opportunity: Acquisitions Can Be Your Catalyst – a white paper sharing best practices of leading firms who have completed acquisitions. Three investment advisory firms that have completed successful acquisitions – Buckingham Asset Management, Mariner Wealth Advisors and Rehmann – all offer insights, including why they chose to pursue acquisitions and their criteria for evaluating a target firm.
• Realizing the Power of Two: The Art and Science of a Successful Merger – a white paper focused on mergers – designed for both growth and succession planning – that takes advisors step-by-step through a successful deal.
• Buy-out Benefits: When an Offer is Too Good to Pass Up – a white paper that offers examples of two advisory firms that were acquired. It addresses when firms should start thinking about liquidity options, whether advisors should consider entertaining offers if they weren’t planning to sell, and how they can determine the right buyer for their business.
“We believe that to be high-performing, a firm needs to continually reevaluate its existing business model against its goals to stay competitive.iv This offering was built to address the understanding that many high-performing firms evolve and are looking to build their businesses through M&A,” said Canter. “Our goal is to help firm leaders craft and execute strategic M&A programs — from planning to financing a deal — and ensure they’re using a ’1+1=3‘ model, where firms become stronger through M&A.”
About Fidelity Practice Management and Consulting Program
The Fidelity Practice Management and Consulting Program is a multi-faceted client service that provides advisors access to a wide array of insights, best practices, strategic consulting services and business-oriented tools and programs to help accelerate business growth, maximize productivity and protect their practices.v
About Fidelity Institutional Wealth Services
Fidelity Institutional Wealth Services is a leading provider of trading, custody and brokerage services to Registered Investment Advisors, Trust Institutions and Third Party Administrators. The company is able to leverage the capital, resources and expertise of the Fidelity organization, one of the world’s largest financial services companies, on behalf of its clients. This includes access to a comprehensive set of products and services, innovative investment tools and research, an integrated brokerage and trust platform, and dedicated client service professionals – all designed to help its clients thrive by growing their businesses, more effectively meeting customer needs, and enhancing operational efficiency and profitability. Fidelity Institutional Wealth Services custodies more than $655 billion in assets on behalf of over 3,300 clients, as of March 31, 2013. For more information about Fidelity’s services, please visit http://fiws.fidelity.com.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $4.2 trillion, including managed assets of $1.8 trillion, as of April 30, 2013. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
About Live Oak Bank
Live Oak Bank was founded in 2008 with one goal: provide business loans to independent businesspeople in niche industries, including investment advisory firms. Live Oak is an FDIC-insured national footprint bank and one of the largest originators of small business loans in the country. Visit: f4d.62b.myftpupload.com/advisor to learn more.
About RIA Match
RIA Match provides advisors and RIAs with solutions for succession and growth. After advisors build their online profile and select their goals, they are matched and can start communicating anonymously and securely. They can search for free and pay to connect.
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Service marks appearing herein are the property of FMR LLC.
Clearing, custody or other brokerage services may be provided by National Financial Services LLC, or Fidelity Brokerage Services LLC. Members NYSE, SIPC. 200 Seaport Blvd, Boston, MA 02210.
Fidelity Investments Institutional Services Company, Inc., 500 Salem Street, Smithfield, RI 02917
i Source: 2011 Fidelity RIA Benchmarking Study.
ii Subject to satisfaction of Live Oak’s due diligence review.
iii Cerulli, “State of RIA Marketplace”, 2012.
iv The 2012 Fidelity RIA Benchmarking Study defined High-Performing Firms as the top 25% of eligible firms based on a composite ranking of Growth, Profitability, and Productivity. The theme is not intended to connote investment returns.
v When appropriate, Fidelity works closely with third-party providers to offer its practice management solutions. The third-party vendors participating in the Fidelity Practice Management & Consulting Program are not the only firms that provide products and services of this kind. Fidelity does not provide recommendations or endorsements with respect to any Fidelity Practice Management & Consulting Program vendor or any such vendor’s products and services. Each client should conduct its own independent diligence before engaging a vendor and determine whether the particular vendor is right for them. Clients deciding to employ the services of, or purchase products offered by, a vendor in the Fidelity Practice Management & Consulting Program will be required to work directly with the vendor. Fidelity is not a party to any business or contractual relationship between Fidelity Practice Management & Consulting Program vendors and Fidelity clients.