United Capital eyes more takeovers, maybe a sale

NEW YORK (Reuters) - Wealth manager United Capital Financial Partners Inc, which snapped up 30 investment advisers in five years, is now thinking ahead to its own sale within the next few years.

United, based in the Los Angeles suburb of Newport Beach, is one of several consolidator firms building a national role for themselves by acquiring registered investment advisers in key cities, hiring adviser teams and by boosting business from clients.

This year, the firm, which manages about $10 billion in assets, plans to buy another six to eight firms and add "several billion dollars" in new assets. United also says existing offices may add up to $1 billion in assets, while revenue could again rise 60 percent.

"I don't think we have ever seen as much opportunity as we are seeing now," Joseph Duran, United Capital's chief executive and a co-founder, told Reuters.

United Capital's areas of focus right now include Memphis, Atlanta, the Northeast and Colorado -- part of a wish list posted by the firm on its website.

"We're building a national firm. We want to be in all 25 major cities," Duran said.

ROLL-UPS

There are thousands of small registered investment advisers (RIAs) across the United States, often one or a handful of wealth managers working for themselves.

Over the past decade, private equity investors and "roll up" firms such as HighTower Advisors, Focus Financial and National Financial Partners Corp (NFP.N) have emerged to consolidate these firms.

United Capital -- founded by the partners of a wealth manager that was sold to GE and is today known as Genworth Financial -- has raised capital from Grail Partners and Bessemer Venture Partners. Ownership is evenly split between the advisers, employees and private investors.

Duran said United Capital will complete its geographic expansion in "the next few years" and then enter a new phase of development where less capital will be needed.

At that point, its investors will look to establish a market for their stakes or seek a cash distribution.

"Our goal is to create liquidity for our shareholders in the next few years. It could be in the form of an IPO or selling a stake to private equity or to a foreign bank seeking a footprint in the U.S.," he said.

A public float is the least likely, since listed firms must manage conflicts between shareholders and clients, he said. Preferable, is a transaction where they would sell part the firm and keep the rest. That said, an outright sale is also on the table.

NO COWBOYS

For now, though, United Capital is still hunting for acquisitions. Duran expects a number of advisory firms may be under pressure to sell due to finances weakened by the market meltdown of 2008. Markets have rebounded since early 2009, but have not recovered all the way. That means revenue remains blunted, but firms are still wrestling with the same expenses. Many RIAs, hoping to ride out the storm, funded these expenses out of pocket.

The consolidator strategy has not always worked. The recent meltdown caused some stress for firms beholden to buyout investors or firms under a load of debt.

Duran says United Capital is different. It is a model that integrates RIAs into one technology platform, offers research and, in time, will have a common brand. Most consolidators buy independent advisers and let them keep their names.

"My role model is Cisco Systems (CSCO.O). They're very acquisitive, yet you think of them as one company," Duran said. "Our goal is the same: to have one company, one platform."

Another role model, is Starbucks Corp (SBUX.O), where customers can get individualized coffee drinks delivered in identical settings and in the same manner across the country.

With that in mind, about two thirds of the independent firms acquired since 2005 will adopt the United Capital name this year. In exchange, United Capital promises to stoke growth by handling technology, research, compliance and other administrative duties.

"We're not for everyone," Duran added. "We're not looking for cowboys. You have to be cavalry. You have to want to be part of something."

(Reporting by Joseph A. Giannone; editing by Andre Grenon)