Stratos buys 25% stake in affiliated Boston RIA
Andrew Foerch 12 April 2022, 15:34
'We're going to continue to be opportunistic and aggressive,' said Stratos Wealth Enterprises president Lou Camacho.
RIA giant Stratos Wealth Holdings has bought into a $350m Boston RIA.
The $23.3bn Emigrant Partners-backed firm said Tuesday that it has acquired a 25% stake in Veritas Boston Wealth Management, an affiliate firm of in-house RIA Stratos Wealth Advisors. Stratos is using its RIA acquisition vehicle, Stratos Wealth Enterprises, to carry out the transaction.
Specific financial terms of the deal were not disclosed, but Stratos Wealth Enterprises president Lou Camacho (pictured) told Citywire the firm bought its stake in Veritas using all cash at what he described as ‘an enhanced multiple.’
‘As advisors’ businesses grow, they become ever more complex. Whether it’s succession, liquidity, scale or growth, that’s when they start looking to additional partners. We’ve been very fortunate with a number of our affiliates where we have the opportunity to take an equity stake,’ Camacho said. ‘In the case of Veritas, it’s really for access to the broader scale and infrastructure that Stratos brings to the table, as well as the opportunity to accelerate growth with potential tuck-in deals.’
He said Stratos would not fund transactions for Veritas but could help source potential acquisition targets and determine accurate valuations for involved parties.
Veritas was previously owned by managing partners Mark Roman and Frank Perfetuo, who co-founded the nine-person firm in 2019, and partner Kevin Dufault. All three shareholders sold a portion of their equity on a pro rata basis to Stratos. Camacho said the firm’s 25% stake represents a non-controlling interest in Veritas.
‘We prefer to partner with operators that are going to continue to remain engaged in the firm over the long term. We’re an infrastructure platform, first and foremost. As we have done more and more of these acquisitions, we’ve found we’re best suited to deploy that infrastructure versus being direct operators in the business,’ Camacho said.
Headquartered in Beachwood, Ohio, Stratos maintains multiple business lines under its holding company umbrella. Its most prominent business is Stratos Wealth Partners, a hybrid RIA affiliated with independent broker-dealer LPL Financial. It also has an in-house asset manager known as Fundamentum. Most recently, Stratos acquired a majority stake in NSC Asesores, a wealth manager headquartered in Mexico City which manages roughly $4bn in client assets.
The Stratos Wealth Enterprises arm has ramped up its RIA investment activity this year, particularly for firms already affiliated with its various sibling entities. The firm in February increased its minority equity stake in $1.5bn San Diego RIA BWM Financial to 33%, and in March bought a 25% stake in the Marietta, Ga.-based practice of independent advisor Robert Patti. Both firms were previously affiliated with Stratos Wealth Partners. Of the 10 RIAs Stratos has invested in, four are affiliate firms, including Veritas.
‘We want to make sure that we’re deepening our partnerships with some of our fastest growing advisors across the country,’ Camacho said. ‘That’s a targeted effort and I think we’re going to continue to be opportunistic... and aggressive on that front.’