Choreo, the registered investment advisor created last year when private equity group Parthenon Capital lifted out the wealth management business of accounting firm RSM, has acquired the wealth management business of BDO USA, representing approximately $8.1 billion in assets, 33 employees, including 14 advisors, and seven offices. Terms of the deal, which closed Tuesday, were not disclosed.
The deal brings Choreo into new markets, including Denver, St. Louis and Florida, and expands its existing presence in the Mid-Atlantic and Chicago. It also adds outsourced CIO and investment consulting services to the firm and brings the RIA’s total assets to approximately $23.2 billion.
The wealth management practice will adopt Choreo branding, and the hope is to establish a presence in all of their offices. The wealth business’s leadership, including President Mark Biegel, will remain.
The deal represents the latest example of Choreo partnering with a CPA firm that owns an RIA firm.
“Our fundamental belief is that clients benefit when their tax, financial, estate and investment advisors work as closely together as possible,” said Larry Miles, Choreo CEO, in an exclusive interview. “One of our goals is to be the preferred wealth partner to the tax professional community. We don’t think there’s an RIA out there that has deeper ties to more top-tier CPA firms than we do.”
BDO provides assurance, tax and advisory services through its 75-plus offices and 800 independent alliance firm locations. As part of the deal, Choreo will become a member of the BDO Alliance USA Business Resource Network, a group of about 100 non-CPA firms that offer their services to members of the Alliance.
Meanwhile, BDO will become part of Choreo’s CPA partner program, the Choreo Partner Alliance. While Miles acknowledges many companies partner with CPA firms, he said Choreo does it differently. Choreo will partner with CPAs in four ways: sharing real estate, sharing revenue, providing education to the CPA firm’s employees and giving them an equity stake in the RIA. The BDO transaction included the real estate, education and equity component, but not the revenue share.
“These CPA firms—BDO, RSM—have tens of thousands of employees who need everything from financial literacy 101 to what are the benefits and advantages to being a partner at one of these firms,” Miles said. “We provide education to all of their employees.”
Miles said these CPA firms didn’t want to get out of the wealth management business.
“They value it for their client,” he said. “It’s just a very complex regulatory framework that we have, that they have as CPAs with independent securities issues. We take a lot of the burden off of them, where we are an independent firm, and their ownership as it relates to Choreo—they’re a distinct minority investor.
“It really makes their life a lot easier, while at the same time allowing their partners and clients to avail themselves of a quasi-in-house solution.”
The Choreo Partner Alliance is not limited to those CPA firms that sell their RIA subsidiary to Choreo.
“We have a small number of CPA firms that have not historically had wealth management as a service offering that want to add it as a service offering, and they’re in the process of joining the Choreo Partner Alliance,” Miles said.
He declined to name specific firms.
The BDO deal represents Choreo’s fourth acquisition since Parthenon Capital took ownership in February 2022. Choreo made its M&A debut in November 2022 when it acquired Enso Wealth Management, a $1.8 billion RIA in Petaluma, Calif. Just a few weeks later, the RIA announced its acquisition of Cherry Bekaert Wealth Management in Richmond, Va., which was affiliated with Cherry Bekaert Advisory out of Raleigh, N.C. CBWM oversees about $1 billion in client assets. In December 2022, Choreo added GreerWalker Wealth, a $275 million RIA affiliated with CPA firm GreerWalker LLP.
“We have a unique history of living at that intersection of the tax professional and the wealth advisor,” Miles said.