This content is from: Wealth Management

Inside Captrust’s Acquisition of $85 Billion Ellwood Associates

“This is not a succession plan exercise; no one is really cashing out.”

Captrust, the Raleigh, N.C. company that manages $60 billion in assets and advises on more than $600 billion, has a tried-and-true acquisition strategy.

It identifies a firm in “a position of strength,” often a direct competitor who might seem like an unlikely seller. Then Captrust calls them about joining it. And keeps calling them, over the course of weeks or years, however long it takes, until they are ready to consider a deal in earnest. In many cases, they eventually choose to join Captrust (the wealth manager has acquired more than 50 advisory practices and companies) and it just happened again.

On Monday, Captrust said it acquired Ellwood Associates, a similar employee-owned company in Chicago founded in 1977 that manages or advises on $85 billion in client assets. All 55 of Ellwood’s employees will join Captrust, including a team of consultants with an average of 20 years of industry experience. Terms of the deal were not disclosed.

“This is not a succession plan exercise. No one is really cashing out,” Dan George, managing director at Ellwood Associates, told RIA Intel.

Ellwood is a healthy business and saw synergies with Captrust. It was also facing the same challenges as some other wealth managers and needed to invest in its operations and employee resources to keep improving. Or it needed to find someone who could provide those things. Captrust already had solutions to those challenges and the scale to keep facing new ones.

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“The world we operate in just gets more complex every year,” George said. “It just seems like it gets more expensive, not less.”

Like Captrust, Ellwood is an advisor to endowments, foundations and other institutions, a consultant to retirement plans, and a private wealth manager — three businesses that can complement each other. But Ellwood, albeit smaller overall, is helping scale parts of Captrust and adding areas of expertise it didn’t have before.

The addition of Ellwood’s institutional practice that serves 100 clients and $8.5 billion will nearly double Captrust’s practice, which had 223 clients and $10.4 billion before the deal. Ellwood also has consultants more experienced working with hospital systems and other healthcare companies.

Ellwood’s private wealth management business is really a multi-family office serving the wealthiest investors. That's a business welcomed by Captrust, which typically serves families worth between $3 and $50 million.

Captrust is also gaining an office in Chicago, a city it has long wanted to be in, Rick Shoff, a managing director focused on institutional recruiting and acquisitions at Captrust, said.

Acquiring Ellwood — a firm that Captrust found itself closely competing with — also means one less competitor out there. “By sheer numbers we should increase our chances of winning,” Shoff said. (In February, Captrust struck a deal to acquire Cammack Retirement Group, one of its biggest competitors in the retirement plan consulting space.)

“Most firms, like Ellwood, didn’t have to do anything. We really only approach firms that are coming from a position of strength,” Shoff said. “And I think when firms are looking for someone to partner with, they are looking for someone proven.”

Michael Thrasher (@Mike_Thrasher) is the editor at RIA Intel and based in New York City.

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