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Genstar Capital Puts Mercer Advisors on the Block

Genstar, which owns a majority stake in the RIA, hired Goldman Sachs to advise on the sale, the same team that advised Kestra on its sale to Warburg Pincus.

Genstar Capital, a private equity firm with investments in the financial services space, has put Mercer Advisors, a registered investment advisor with over $16 billion in client assets, up for sale, according to a source familiar with the investment banking community. The news was first reported by Buyouts Insider.

Chris Tofalli, a spokesman for both Mercer and Genstar, declined to comment.

Genstar, which owns 75% or more of the RIA, hired Goldman Sachs to advise on the sale, the same team that advised Kestra Financial on its sale to Warburg Pincus. Lovell Minnick, Mercer’s previous majority owner, still has a small stake in the RIA of less than 25%, according to its Form ADV.

Pitchbooks went out last week to roughly a dozen potential buyers, most of whom were other private equity firms; but they also went to one or two strategic acquirers, the source told Initial bids are due in two weeks.

Mercer is seeking 15 to 16 times pro forma, run-rate EBITDA, which is currently at $50 million, according to Buyouts.

Genstar acquired a majority interest in Mercer in March 2015. Since then, the RIA has been on an acquisition tear, with aspirations to become a national brand. In 2017, the firm brought on Dave Welling, who grew Black Diamond into a tech powerhouse, to lead the firm so founder David Barton could focus on mergers and acquisitions strategy.

Just in 2019, Mercer has acquired four smaller RIAs, adding a total of $1.2 billion in assets under management.

“They’ve already consolidated the branding; they’re truly consolidating a lot of the back office,” the source said. “They’re really the only major, in my opinion, national option.”

Genstar owns several firms in the wealth management space, including Cetera Financial Group, a network of independent broker/dealers, which it acquired last summer

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