RIA Rising

Lee Equity Partners Wants Edelman Financial

Another private equity firm has taken an interest in a wealth management business. Lee Equity Partners said today it would take publicly-held Edelman Financial Group private by paying $8.85 a share in cash, a deal that would value Edelman at roughly $258 million.

Lee is paying a 43 percent premium over Edelman’s closing stock price on Friday. The firm has $17 billion in client assets and 43 offices around the country. Its Edelman Financial Services unit is one of the largest financial planning businesses in the country, with $8 billion in assets for more than 15,000 clients; it’s earned a spot on Registered Rep.’s Top 100 RIAs in America list.

Edelman’s stock closed today at $8.74.

Co-CEOs Ric Edelman and George Ball would remain with the firm and maintain “significant” equity in it, Houston-based Edelman Financial Group said in a press release. Both sides hope to close the deal in the third quarter. Edelman’s senior management holds 26 percent of the shares and plans to vote in favor of the deal, the company said.

Edelman gained fame by hosting a national radio program on financial topics. Sanders Morris Harris Group took a majority stake in Edelman’s firm in 2005, and last year the company rebranded itself as Edelman Financial Group in a nod to its brand strength.

Gary Roth, chief financial officer of United Capital Financial Advisors, which takes stakes in RIAs, said today’s announcement reflects growing interest by private equity in the wealth management sector. Last year Warburg Pincus acquired the Mutual Fund Store.

“I think (Lee) probably see an organically growing independent wealth management firm at its core with one brand, nationally,” Roth said. “I think the story is finding their core business, which they’re clearly seeing as wealth management … for the mass affluent and the emerging wealthy. Everyone is seeing that as the growth area, and this is where the majority of the growth revenues and profits are coming from.”

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