How a spousal push, and a geographical pull, helped a deal come together
Deb wanted him to sell.
Long before Richard Coe turned 70 last year, his wife had been ‘strongly advocating’ for his retirement. Coe – who founded his namesake firm in 1983, loved his career and knew nothing about selling a business – was slow to proceed.
By the time he sold Coe Financial Services, a Wichita, Kansas-based RIA with about $126m in AUM, his outlook had completely changed.
‘I went from reluctance to acceptance to, now, excitement,’ he said.
Trusting the process
Coe used RIA consultant Succession Resource Group (SRG), based in Portland, Oregon, to help with the sale process. ‘That kept me out of the emotional side of the negotiating,’ he said.
SRG narrowed a list of more than 50 interested parties down to 10 before Coe got involved. The seven finalists ranged from very large to very small.
On the small side, there was a Wichita-based advisor in his 30s who left a favorable impression on Coe and his wife.
‘We thought he would operate similarly, in many ways, to how I’ve operated,’ Coe said.
But although the conversations went well, an offer did not result. ‘I can understand why someone might get a little reluctant with the market going crazy,’ Coe added.
Nonetheless, Coe did get three ‘very attractive’ offers.
‘I cared about financial planning emphasis, likely investment results and the likely client experience,’ Coe said.
One of the larger bidders, Creative Planning, checked all those boxes.
Personal touch
SRG chief executive David Grau said that Creative Planning also distinguished itself from other large firms by having CEO Peter Mallouk, rather than a subordinate, at the deal table.
Mallouk said that after an initial ‘checklist’ talk with one of his colleagues, potential sellers deal directly with him.
‘There’s no M&A team, at all,’ he said. ‘It’s me talking with the principals and key team members of the firm, and I also make sure to meet all the employees before a deal is signed.’
From Creative Planning’s perspective, geography was a big factor behind the purchase.
Creative Planning already had clients in the Wichita area, but they were covered by a group of advisors working out of the company’s Overland Park, Kansas headquarters. Mallouk said that extending physically into Wichita is an opportunity to ‘localize’ services while testing out a secondary market close to Creative Planning’s home base.
However, there was a hitch. Coe wanted to orchestrate a quick exit. It was Mallouk’s first time working with an owner who wanted to exit in less than a year.
‘All of our other deals have been owners who want to stay and continue to grow,’ he said.
However, Coe’s timeline aligned with Mallouk’s desire to promote a financial planner from the Wichita area to a wealth manager position. Adding Coe’s office gave Mallouk the perfect outpost to dispatch his new manager.
Meanwhile, Coe agreed to stay on for a three-month transition period that will come to an end in mid-June. Another advisor and administrative staffer at his practice will continue working at Creative Planning.
With everything set, even the economic turmoil and market crash caused by the Covid-19 pandemic didn’t derail the deal.
Early in the process, Mallouk told Coe: ‘We will close quickly, within a week, if we have an agreement.’
‘I’m thinking, “Wow,”’ Coe said. ‘In the midst of all that was going on in the market, to have a firm that was able to close within a week, that was very significant to me.’
Disclaimer
This article was first published by Jake Martin.
The original article can be found here. All rights to the original content are held by Citywire.
