Private equity money finds new entry point to wealth management

In a move that could represent a new access point for private equity firms trying to gain exposure to the financial services industry, Boston-based Copley Equity Partners has taken a minority ownership stake in Gregory FCA, a Philadelphia-based public relations firm specializing in advisory firm clients.

The investment agreement, which is the first of its kind for both firms, is unique for the way it goes beyond the increasingly popular private equity target of registered investment advisers to focus on firms that do business with RIAs.

“They are looking for companies that are servicing an industry that’s growing,” said Joseph Anthony, president of Gregory FCA, who splits the majority ownership stake with Gregory Matusky, who founded the PR firm in 1990.

Predictable income streams and potential for growth have made the RIA space an increasingly popular target for PE investors, which has contributed to record-level merger and acquisition activity among RIAs.

While Mr. Anthony doesn’t expect his new PE partners will turn the PR firm into an acquisition machine, he does recognize the benefits of “growth capital.”

“There are some digital and artificial intelligence tools we want to add,” he said. “We’re also in a slice of the financial services world that hasn’t been impacted by consolidation as much. We want to merge in firms or recruit talent in certain areas.”

Carolyn Armitage, managing director at Echelon Partners, said the fact that PE money is now going after a PR firm illustrates the evolution of the financial planning industry.

“Private equity firms are enthusiastic to get into the wealth management space even if in peripheral businesses like public relations,” she said. “As wealth management firms are becoming more professionally run organizations, instead of small practices and boutique firms, they are enlisting the assistance of outside vendors to help elevate their brands.”

David DeVoe, managing partner at DeVoe & Co., said that acquiring a PR firm focused on wealth management could be a way for a PE firm to diversify its portfolio within the financial services industry.

“Certain media companies can grow quickly and have attractive margins at critical mass, which are two characteristics that private equity always likes to see,” Mr. DeVoe said. “A private equity firm that has a portfolio of companies within a media company’s sweet spot could also be bringing very warm introductions to a number of prospective clients.”

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Details of the agreement were not disclosed, but Peter Trovato, managing principal at Copley, said he is not looking for a short-term investment and quick exit.

“When we look at making a direct investment into a private company, we aren’t looking for the next buyer,” he said. “At the outset we don’t put defined timelines on our hold periods.”

Founded in 2012 as a single-family office, Copley does not disclose its total assets under management, but Mr. Trovato confirmed that it has an overall private equity portfolio of $350 million.

Gregory FCA, which has 80 employees, works primarily with RIA clients, but also works with companies in the exchange-traded fund, asset management, wealth technology and banking businesses.

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Related Topics: Private Equity