Wealth Enhancement Group is getting a new investment from private equity firm Onex Corp., which will join TA Associates as equal capital partners in the independent wealth management company.
“Our new investment from Onex augments our continued relationship with TA, bringing together two of the most accomplished private equity investment firms in the world,” CEO Jeff Decko said in a statement. “As we embark on the next stage of our growth vision, this is the perfect moment to bring aboard an additional partner with a long history of successful financial services investments.”
According to WEG, the investment from Onex will “drive WEG’s next stage of organic growth and M&A expansion.” So far in 2021, Minneapolis-based WEG has increased its assets by $2.4 billion organically, while making 10 acquisitions that totaled about $10.4 billion in client assets.
Onex Managing Director Todd Clegg said the firm was “delighted” to partner with both WEG and TA Associates, lauding the wealth management firm for its client-first approach and ability to succeed “across a broad spectrum” of cycles in the economy, industry and market.
“Looking ahead, we’re confident that WEG remains uniquely well-positioned to keep growing, both organically and by continuing its track record of well-executed acquisitions,” he said.
In April, WEG acquired Pillar Pacific, its first firm on the West Coast, with $1.6 billion in assets and a specialization in serving clients who speak Mandarin. In August, WEG acquired a Maryland-based RIA with $853 million in assets and Investor Solutions, a Miami-based RIA with about $1.1 billion in total client assets (the latter acquisition marked WEG’s first South Florida location). The dual deals pushed WEG’s total client assets to more than $40 billion.
TA Associates invested in WEG in 2019, purchasing the then-$11.8 billion AUM firm from Lightyear Capital, which had bought a majority equity stake in the company in 2015. The global private equity firm focuses on the tech, healthcare, consumer, business and financial services industries, and to date has invested in more than 550 companies and has raised $47.5 billion in capital since being formed in 1968. TA Associates Managing Director Roy Burns said WEG’s potential and success rate were already clear when TA made its acquisition in 2019.
“Since then, the firm’s leadership team under Jeff Dekko has exceeded our expectations by generating consistent growth and strong client retention rates, even in the face of extraordinary events such as the pandemic and its resultant disruptions on the market and our economy,” Burns said.
In an interview with WealthManagement.com, Dave DeVoe, founder and managing director of San Francisco-based consulting firm and investment bank DeVoe & Company, said the Onex/WEG deal should be seen in the broader context of continuing robust M&A growth in the industry, with the RIA space now in its seventh successive year of record activity (with DeVoe expecting 2021 will be more of the same).
“It’s another vote of confidence in the independent wealth management model, and we’ve seen a lot of private equity activity in the past several years,” he said. “It’s part of a broader trend of some of the major acquirers in the marketplace seeking additional capital to accelerate their acquisition activities.”
From the vantage point of the acquirers, DeVoe noted that Onex seemed to determine that the wealth management space remained an attractive growth area, citing the firm's acquisition of OneDigital last October as a relatively similar move. TA Associates, on the other hand, may already be in a situation in which they’d hit their target returns on their investment after only a few years.
“In this case, TA likely couldn’t be happier with the results they’ve had since they’ve made the investment, and are having a liquidity event, but also want to continue to stay involved not only in the space, but with Wealth Enhancement Group in particular, and continues to see an exciting future for the organization,” DeVoe said.
Despite the investment, WEG will continue to be an independent firm maintaining its current leadership team, which includes Dekko, Chief Investments & Business Development Officer Jim Cahn, CFO Kelly Windorski, Chief Digital & Marketing Officer Utkarsh Patel and COO Terri Kallsen.