The verdict among top industry leaders at last week’s Schwab IMPACT conference in Chicago was unanimous: First Republic Bank’s acquisition of Luminous Capital earlier in the month in a generous all-cash deal was considered a very, very big deal for the independent advisory business.
Beyond that consensus, however, executives were divided on whether the scope of the Luminous deal was a sign of things to come, or the exit strategy high-water mark of the breakaway broker movement.
At the least, the deal, reported to be between $125 and $200 million, signals the validation of the independent advisory model and is likely to accelerate the breakaway broker movement, according to industry experts.
“The deal is a strong testament to the value of the RIA model,” said David DeVoe, a San Francisco-based strategic consultant and one of the industry’s leading authorities on mergers and acquisitions. “Luminous is a phenomenal success story, and the attractive valuation underscores how valuable the RIA model has become.”
The firm's meteoric rise to over $5 billion in assets under management in just four years highlights the importance of “growth, scale and business management,” which was rewarded with “disproportionate” sales terms, said John Furey, head of Phoenix-based Advisor Growth Strategies.