GCG Advisory Partners, a wealth management partnership based in Charlotte, N.C., has announced a “significant” investment by middle-market private equity firm LNC Partners that will help escalate a strategy of growth and flexibility while onboarding an increasing number of new firms.
GCG was founded 30 years ago as GCG Wealth Management, but second-generation Managing Partner Joel Burris didn’t embark on an acquisition strategy until four years ago, when he decided to help fund individual advisors in need of their own succession plans.
“We realized the wealth management industry had a major issue,” said Burris, who is 44 and pointed out that he’s often the youngest advisor in the room. “It’s an aging industry right now. And we saw the unique opportunity to help individual practices in that sub-$500 million AUM space find a way to elongate their legacy while also monetizing.”
Not wishing to become a large-scale “aggregator,” Burris said that he prefers to think of GCG as an “integrator” whose goal is to provide liquidity and succession planning for established advisors, as well as flexible technology and tools to support entrepreneurial advisors looking to grow. Bringing these firms together under the GCG umbrella, he said, will foster relationships that can become desirable succession plans for firms who may not have a younger partner who is able or willing to take over.
GCG has brought in eight affiliated firms over the last four years and currently oversees about $1.8 billion in assets. Burris expects to add as many as six more over the next six to nine months, including a $100 million firm set to be announced this summer, along with a cumulative $2 billion in AUM.
Based on its current M&A pipeline, Burris said he hopes to increase GCG’s top line revenue by as much as 150% by the end of the year, from roughly $12 million to as much as $30 million. Going forward, he anticipates year over year growth closer to 200%.
“With the growth trajectory we’re looking at, we needed to find the right funding partner to help us scale,” he said, which led to an “exhaustive” search for a private equity backer.
“We have been very impressed with GCG Advisory Partners and their proven track record of growth, and believe the company is well-positioned to continue building a superior financial services platform for its clients and advisors,” LNC Managing Partner Matt McKelty said in a statement. “[We] look forward to helping Joel and the entire team execute on their vision.”
“From our first interaction with LNC, we knew they were the ideal partners,” said Burris. “And now that we’ve secured a good capital partner for the foreseeable future, that has enabled us to really do the full restructuring and be able to implement all the plans we’ve been making for the last few years. So, this really cements our ability to go out there and acquire and partner with the right firms.”
While still willing to consider a 100% buyout of the right outgoing advisor, Burris said the ideal target is one in need of a succession plan who still wants to stay and continue to grow the value of their practice. Such advisors could benefit doubly upon their eventual retirement, he added, by taking advantage of an equity swap that would reward them for the continued growth of both businesses.
“And when they're truly ready to walk away from their business, they know they're leaving it in good hands,” he said, “but they're getting maximum value for their practice also.”
GCG Wealth Management is registered with Woodbury Financial, and now owned by the incorporated GCG Wealth Advisors holding company after it transitioned from an earlier iteration as an LLC platform focused on recruiting and acquisition. Burris said the restructuring would allow greater flexibility for incoming firms, who will overwhelmingly retain their own culture, branding and books.
“A lot of advisors that join us work under Woodbury,” he said. “But, the way we’re structured, if we go out and buy another practice, that practice can still stay in their current structure, whether they be a truly independent RIA or if they’re with another broker-dealer.”