News, Vision & Voice for the Advisory Community


Marty Bicknell sells Tortoise stake for '$150 million' with cash already earmarked for four or five RIA purchases

Mariner Holdings CEO banks tidy gain as he dumps his 67% stake in $20 billion-AUM Tortoise that had just $1.3 billion of AUM when he bought it

Monday, October 23, 2017 – 10:08 PM by Brooke Southall
no description available
Marty Bicknell: I've been talking about turning back on the inorganic engine.

Brooke's Note: Time flies. Marty Bicknell, Mariner Wealth Advisors' CEO, hasn't closed a deal on an RIA in a solid three years. Now, the Leawood, Kan.-based wheeler-dealer just closed on his biggest deal yet by selling the gem of his asset management business, Tortoise Investments, for perhaps 15x to 20x what he paid for it. Given that four of the five [the fifth remains as CEO] Tortoise founders are completely cashed out and out the door upon the sale's closing, it's unsurprising that Bicknell would choose this moment for his own exit. But there may be a bigger arbitrage happening. Bicknell got his start on the wealth management side of the business and that is where his heart -- and opportunity -- lie, he says. The bad news for buyers of RIAs is that so many players want in. But the good news is that there is better evidence of the Wall Street advisor dam breaking than ever, creating a healthy gush of managed assets and human capital to RIAs. It comes at a time of greater determination of aging RIAs principals to map their succession. Of course, nothing encourages a practice-selling-inclined RIA to pull the trigger quite like a deal high in cash content. With the sale of Tortoise, Bicknell promises to jackrabbit his way to the closing table with several RIA deals.

After executing one of the biggest non-roll-up-RIA-buying sprees in the history of wealth management, Marty Bicknell, the CEO of Mariner Holdings LLC of Leawood, Kan., slammed on the brakes in 2014 leaving off at $12.5 billion of AUM -- up from $8 billion of AUM at the end of 2013. 

The purchase of Vantage Investments Advisors LLC, which closed in January 2015, added $1.1 billion of AUM to that total but it also pushed Bicknell's financing comfort zone by demanding that he use leverage. See: Marty Bicknell buys a $1.1 billion RIA that serves the mass affluent, and taps credit for the first time.

Nearly three years later, Bicknell, 49, is once more revving the firm's RIA M&A engine after signing a deal that will net him a bundle and make tapping credit a distant memory, say M&A experts. See: Housen deal shows Marty Bicknell can make it in Jersey -- by word of mouth.

"Based upon press reports showing Mariner sold 67% then it'll likely yield the firm $150 million or more," says Dan Seivert, CEO of ECHELON Partners of Manhattan Beach, Calif.

The anticipated windfall results from signing a definitive agreement on Bicknell's part to sell his firm's 67% stake in the $20-billion-AUM asset manager Tortoise Investments, also in Leawood, to Lovell Minnick Partners LLC, a Los Angeles-based private equity firm. See: Why exactly Lovell Minnick sold First Allied about five years ahead of plan.

Tortoise is a holding of Montage Investments, the asset management roll-up arm of Mariner Holdings. The explosive growth to $20 billion AUM of Marty Bicknell's second roll-up-like venture, Montage Investments, and where his $8 billion wealth manager fits in

Energy boost

Mariner bought the controlling stake in 2010 when Tortoise managed just $1.3 billion coming off the massive market downturn of 2008-'09. Bicknell says his asset manager's nearly 20-fold jump in assets can be traced to its specialty of investing in energy companies. Bicknell adds that he has substantial personal assets invested at Tortoise and that when the deal closes he plans to up his investment in the fund. 

Bicknell says that he never lacked access to capital to do RIA deals. Yet the sale of Tortoise certainly served as a catalyst for jumping back into the game.

"I've been talking about turning back on the inorganic engine on the wealth management side," he says. "You'll see the first deal in about seven to 10 days. We have seven or eight deals in the pipeline and we expect four or five will come to fruition." 

Mariner Wealth now has 11 partner firms that manage a combined $20 billion, according to Bicknell. Of the partner firms, Mariner acquired eight. The other three were started by breakaways --  including Bicknell himself, who brought his book of business over from A.G. Edwards. See: The explosive growth to $20 billion AUM of Marty Bicknell's second roll-up-like venture, Montage Investments, and where his $8 billion wealth manager fits in.

But Mariner ceased buying RIAs because, Bicknell says, it was determined to fill the promises of scale and synergy it made to existing partners. Mariner tends to concentrate on RIAs with a heavy tax and accounting specialty. See: Big Midwestern RIA buys itself a national presence in deal with CBIZ.

RIA-seller supply high

But now all M&A systems go at the big RIA now flush with both cash and a supply of sellers.

"The amount of supply [of RIAs for sale] is as high as I've seen it," Bicknell says. "Our pipeline is as big as ever and we are taking far more inbound calls [from would-be sellers]."

But if the supply of sellers is peaking, the demand is also sky-high, which is keeping prices up, according to David Selig, CEO of Advice Dynamics Partners, an M&A consultancy in Mill Valley, Calif.

David Selig: The smaller RIAs are pushing the limits on valuations right now.

"Investors of every stripe have entered the space because they have come to the same conclusion," he says. "The smaller RIAs are pushing the limits on valuations right now." See: Grandaddy $220-billion RIA 401(k) roll-up books new $20-billion deal but may have bought its way out of a growth plan.

Seivert agrees and sends along two charts to back up that thesis. One shows a dramatic upturn in buyers anticipating making purchases and another shows that fewer firms anticipate seeking to be acquired.

But Bicknell is no contrarian when it comes to selling Tortoise, Selig adds.

"[Bicknell] certainly took advantage of a trend we're seeing in asset management -- an increase in transactions in 2017," he says, adding that there were 58 deals with combined assets of $1.3 trillion in the first half of 2017. See: The art of the leveraged deal: Borrowing against the patience of a Chinese buyer, 41,000 FAs and the White House ethics office, Scaramucci scores 10 days of fame and runway to do more deals.

'The bigger thing'

After growing at a torrid pace, Tortoise has reached the limits of its expansion capacity, Bicknell says. Three co-founders, Zachary Hamel, Kenneth Malvey and Terry Matlack, will sell their remaining interest in Tortoise and retire upon the closing of the transaction. Co-founder David Schulte, who left Tortoise in 2015, will also sell his remaining interest.

Yet Bicknell adds that the sale is also an indication of where his heart is. "The bigger thing is I want to run a wealth firm," he says.

Asked whether it was the heating up of the buyer's market or whether the trend of aging advisors seeking succession -- as anticipated for a decade -- is what finally nudged him over the edge to make this deal,  Bicknell picks the latter. He's aware that he's three years closer to retirement.

"My granddaughter is now five years old." 

Related Moves

Dan Seivert's ripping success in RIA M&A deals has odd side effect of having some sidearm staff leave for new vistas

Carolyn Armitage and Mark Bruno left to mutual benefit, while Echelon Partners roars on, feeding the beast of deal-crazed RIA buyers and sellers.

July 20, 2021 – 1:17 AM

Mentioned in this article:

Mariner Wealth Advisors
RIA Welcoming Breakaways, RIA Serving Endowments/Foundations, Advisory Firm
Top Executive: Marty Bicknell

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo