Succession Link, a matchmaking service for wealth management firms, has sold a minority stake to Merchant Investment Management after separating from Chalice Financial Network to take advantage of synergies the Merchant ecosystem can provide.
Established in 2013 with just 38 participants in the first few months, Succession Link—essentially Match.com for wealth management firms looking to buy or sell—now has nearly 60,000 accounts. Founders Nick Gudz and Phillip Flakes sold the site in 2018 to Chalice but recently had the opportunity to reacquire it after a few upgrades produced by the brief combination.
The partnership with Merchant will provide Succession Link with access to additional services, such as lending solutions, and a growing network of wealth management firms interested in making deals.
“We’re going to be able to fill some of the voids that we think could really help,” said Gudz. “We’re also planning on building out an enhanced valuation tool which will assist with the matchmaking on the platform—everything from an advisor's technology to what their clients look like, their location, their assets, their product mix and so forth. This gives us a keen ability to match buyers and sellers, but also provide that succession and continuity component as well.”
Merchant and Succession Link go way back, said Tim Bello, co-founder and managing partner at Merchant. “There’s a friendship and a history here that predates a lot of what the market obviously realizes. And that has given me personal comfort around their vision, the execution around the vision and what could be done with the asset in the future if it were aligned with a unique partner.”
Merchant, a self-described “private partnership that is an operating company” with more than $100 billion in assets among its firms, has been investing heavily in the registered investment advisory sector since it launched in 2017. That includes taking minority stakes in wealth management service providers like RIA consulting firm AdvisorAssist that Bello said are “essential to the growth of the space.”
The Succession Link deal is no different, he said.
It’s free to access the Succession Link platform and browse potential matches, but a paid subscription is required to interact with other members on the site. Three tiers, costing between $500 and $2,000 annually, allow increasing levels of access to members, sellers and listings.
Flakes said finding willing and able sellers has presented an ongoing challenge for the platform. “Financial advisors don’t necessarily have to sell their business,” he said. “The name of the game is always about getting more advisors that are willing to sell their business looking for succession or looking for continuity options. We're excited to see if we can meet that challenge and hopefully get the industry to adopt the idea that you should be doing something not only for yourself, but also for the benefit of your clients.”
“We have just under 60,000 advisors,” said Gudz. “Over 13,000 have indicated that they have no succession plan in place. And then, we have thousands of advisors who are looking for lending resources, whether it be for acquisition or for refinancing operating loans, and that's just touching the surface of a number of other opportunities that exist where Merchant is going to help us build solutions.”
Curious would-be sellers could be introduced to large, active acquirers like Mercer Advisors, which has also taken advantage of the site to accomplish deals. “It’s been an excellent source of M&A activity,” said Dave Barton, head of Mercer’s M&A division, in 2017, when the firm managed $10.7 billion in client assets. Mercer now oversees around $34 billion.
Gudz said Succession Link is currently working on a customizable, white-label version for broker/dealers and RIAs “to allow their financial advisors to confidentially communicate within a defined community for the purposes of buying, selling, merging, and continuity of their businesses,” while continuing to improve the valuation and deal terms calculator on the site and building out a roster of legal support resources for its users.
“We're excited to be back in the fold,” he said. “I don't know of any other platform that exists today that's much like what we have. Next year is going to be a very exciting year and there should be a lot of announcements coming.”