Orion Advisor Solutions CEO Eric Clarke denied a Barron’s report that his firm will be “up for sale soon.” Citing three unnamed sources, the report states that the firm’s private equity parent company, TA Associates, is asking $1.875 billion and turning to Raymond James to advise on the process. TA Associates acquired the majority stake in Orion in 2015.
“We actually don’t have any immediate plans to sell,” said Clarke, whose family founded the firm. “I think that there’s a lot of speculation out there right now.” His business-as-usual comments came after an executive meeting at the company this morning.
Clarke wasn’t sure if the valuation came from Barron’s or the sources cited, but the number surprised him. He said he is aware of outsiders’ interest in buying the company and routinely fields “an inquiry or two a day” from interested investors in the firm. “We come up on a relatively short list of options” for any group looking to make an investment in the independent fiduciary channel, he said.
“TA is very happy with the business,” added Clarke. “We don’t talk about disposal of the business at the board meetings or those types of things.”
Orion recently topped $1 trillion in assets under administration, the firm said. “We’ve signed nearly two firms a day over the past year,” said Clarke.
A spokesperson for TA Associates was not immediately available for comment.
When Orion was planning its purchases of FTJ FundChoice and Advizr, Clarke said he had ample lead time and awareness of the pending transactions. Orion had a business relationship with FTJ FundChoice for years before bringing the companies together and when the time came to make the acquisition, Clarke said the two worked on the deal for “a solid six months.” Last year’s Advizr acquisition took around four months, he said.
Despite Clarke’s denial, an impending sale seems inevitable, said Alois Pirker, research director at Aite Group’s wealth management division. The growth of the RIA market, compared with the IBD market, over the past decade and Orion’s moves to control the advisor’s desktop make the firm an attractive asset for potential buyers. Orion also benefits from having investment management revenue, via Orion Portfolio Solutions (formerly FTJ FundChoice), and the ongoing improvement and integration of Advizr's financial planning on the platform is a boost to advisors as well. Another indicator of a potential sale was Orion's rebranding last year.
Meanwhile, loss of revenue from the movement to zero commission trades means some custodians are looking for new ways to generate cash, said Pirker. “For a big custodian, Orion could be an interesting play. This is other revenue you could get,” he explained. “If you have a custody platform and you put Orion on top, you get a lot of capabilities to serve the small end of the market.”
As for the Barron's report? While there are instances of PE owners placing assets for sale without the knowledge of the firm's top management, Pirker noted that typically the ownership would get the buy-in from the operational executives.
On the other hand, PE investors tend to have five- to seven-year time frames between an acquisition and a liquidity event, "so this timing isn't unusual," said Tim Welsh, founder of Nexus Strategy.