Prime Capital Investment Advisors, a rapidly growing registered investment advisory firm based in Overland Park, Kan., has struck a partnership with Boston-based private equity investor Abry Partners.
Abry is acquiring a minority equity interest in the firm and will have representation on PCIA’s board, while also providing additional capital for acquisitions. The investment signals the next phase of growth for PCIA, which was officially launched in early 2018, with $2.8 billion in assets, by a group of advisors who bought out the owner of their previous firm.
Following 15 rapid-fire acquisitions, active advisor recruitment and strong organic growth, PCIA now oversees $22.5 billion in client assets across 62 locations.
The additional capital provided by Abry will enable the firm to continue executing on its ambitious growth plans and build out its platform, according to PCIA CEO Glenn Spencer, with a focus on ultra-wealthy clients and large retirement plans.
“We want to attract advisors and firms that have key differentiators,” he said. “We want to embrace them and spread them across our company, and we want them to be part of our team and benefit from the products and services that we have that they don't possess.”
The firm provides investment, financial planning, technology, marketing and back office support, he said—enabling partner firms to more than double revenue, on average, over a three-year period.
PCIA has three distinct business segments—wealth management, retirement plan advice and plan participant education—which work together to capture lead opportunities and expand wallet share, according to Spencer; the firm has an organic growth rate of more than 11%, he said.
An in-house investment team, led by CIO Scott Duba, brings some proprietary products to clients, which also help differentiate the firm, said Scott Colangelo, PCIA's chairman and managing partner.
“A lot of the organic growth came from the direct investing and us getting involved in venture and private equity, which clients want more and more access to,” he said. One product the firm brought to market raised $2 billion by mid-April, he explained; another is expected to be “a big deal from a revenue standpoint,” after attracting more than 5,000 retirement plan providers in a single week.
Colangelo said he can see the firm reaching $100 billion in assets within the next 2 1/2 years but is confident they’ll get there within the next five.
“Our goal for growth is around 20% annually,” he said. “But the reality is that we should be doing way north of that.”
Abry views PCIA as “one of the long-term winners in this sector,” Abry Partner James Scola said in a statement Wednesday. “Together, we will continue to innovate and attract the most talented people in the industry, creating tremendous value for all of our stakeholders.”
Established more than three decades ago, Abry invests in a wide range of media, communications, business and information services. The firm holds a stake in Dynasty Financial Partners and exited an investment in Beaon Pointe in 2021.
The combination of high growth, recurring revenue and the large number of opportunities for consolidation makes the RIA sector an attractive investment opportunity for private equity investors. Strong leadership teams, M&A experience, unique areas of expertise and a sophisticated tech stack are all considered attractive qualities in a potential investment, one private equity operator told WealthManagement.com this week.
Increasingly commoditized businesses like trading and custody have led many financial services investors to focus on the independent wealth management space where pricing power and revenue are considered more stable.
“You saw all these parts of the value chain really decreasing, but that core relationship between an end client and an advisor was one that really stayed consistent and was valued and people would pay for that,” the PE investor said.
PCIA sold a 20% stake to private equity firm LNC Partners in 2019. A year later the firm facilitated the buyout of that investment by a single investor and established a new credit facility. The firm recapitalized again in the fall of 2021 when it sold more than 10% of its equity to existing employees, bringing employee ownership to approximately 65%.
The private investor, who was not named, is retaining their position when the deal closes, expected August 1. The firm declined to disclose the amount of Abry's recent investment.
PCIA has more than 300 employees, including more than 180 advisors, across 62 locations nationwide.