Peter Mallouk ends up losing the majority of Goldman-United Capital advisors in headline-intensive deal but keeps the lion's share of the managed assets

Peter Mallouk's deal to buy semi-distressed United Capital from Goldman Sachs ended up facing rough seas, but his firm, Creative Planning, may have smooth sailing to $300 billion soon enough.

The CEO of the Overland Park, Kan.,RIA will apparently net $20 billion of the $29 billion he bargained for in his deal with Goldman, sources and reports say.

In addition, the unusual dynamic of an investment bank selling a large RIA to a mega-RIA netted a high number of defections, as 175 Goldman Sachs advisors –  or 59% of 300 advisors – and their $9 billion, less than 33%, walked out.

Mallouk says the outburst of micro-dramas didn't knock his firm off of its macro ambitions for 2023 --aided by other irons in the fire.

“[We're] considerably ahead of schedule, even excluding United Capital,” Mallouk says, in an email exchange.

Mallouk closed on a deal to acquire Mesirow's corporate 401(k) business and its $13 billion of assets on Oct. 31. The acquisition takes the overall value of assets under its management or administration to at least $280 billion.

The estimated acquired AUM this year is around $38 billion, and other not-yet-announced deals have closed or are in the pipeline, he adds.

Acquisition run

Roughly $9 billion walked out United Capital's door in the two months before Creative Planning fully closed the deal, Nov. 3. The $20 billion, or 69%, brought over the line still bumped Creative Planning's assets by 7%.See: Peter Mallouk has now signed on 30 Goldman Sachs advisory offices.

In total, 125 advisors joined Creative Planning's new RIA from Goldman's Personal Financial Management (PFM) which had absorbed United Capital into a wider RIA group that included Ayco. See: Goldman Sachs fought the squid, but the squid won.

Despite springing leaks, the United Capital deal caps off a 2023 acquisition run that lifted Creative Planning's overall assets by an estimated 18%. See: Goldman Sachs-Creative Planning deal is bleeding defectors -- 16 more last week.

Sharp growth

Combined, the estimated $34 billion of assets acquired in those three deals account for nearly 90% of the firm's inorganic growth in the last year. See: Goldman Sachs unloads high net worth unit to high-flying Peter Mallouk.

Creative Planning began the year with at least $235 billion under its administration or management. Today, it administers more than $140 billion of 401(k) assets, according to a company spokesperson, and manages a further $155.3 billion, according to its latest form ADV.

Allowing for some measure of overlap, the overall value of assets administered or managed by the firm after its latest internal tally stood at “just over $280 billion”, including United Capital administered assets, Mallouk said. 

The figure reflects sharp growth from the firm's 2018 tally of $38 billion, and the $100 billion it oversaw in 2021. See: See: Clobbered by 'flood' of opportunity, Peter Mallouk is now the unlikely RIA M&A king.

Small mercies

The Mesirow purchase has proved mercifully snag free, thus far, according to Mallouk.

“Mesirow reached out and within a few weeks, an agreement was reached, and the close happened within a few months,” he explains.

Founded in 1937, Mesirow's eight advisors and 20 staff will all join Creative Planning, following the close of the deal.

Mesirow is Creative Planning's third acquisition since it last updated its Form ADV in July, when it administered $245 billion. 

The Mesirow deal also continues the slaloming growth of Creative Planning's 401(k) business, which kicked into overdrive when Mallouk agreed to buy Lockton's $110 billion 401(k) arm two years ago to go head-to-head with Edelman Financial Engines and CAPTRUST. See: Creative Planning goes ‘transformational.'

“The acquisition ... is additive,” Creative Planning head of retirement services, Carly Bell, notes in a release.

Case closed

With the United Capital deal closed, Mallouk can also both count his chickens and lick his wounds.

He inked the deal in just eight days after Goldman's initial agreement with Osaic Wealth faltered. See: Source: Goldman Sachs expected to announce sale of 'United Capital' on Monday or Tuesday. 

Just prior to the deal's close, Creative Planning also announced the newly revived United Capital Financial Advisors would run as a stand-alone RIA, under president Jim Rivers, a former managing director and regional head of Goldman's high-net-worth RIA, Ayco. See: United Capital to name new president within 14 days.

In full, Creative Planning has wrapped up at least six acquisitions this year, according to public statements. 

It also signed a deal with Goldman Sachs to add it as a custody option for Creative Planning reps, earlier this year. See: Peter Mallouk grants Goldman Sachs a 'multi-billion dollar' opportunity.

Creative Planning closed 13 deals in 2022, according to a January Echelon Partners report.

Creative Planning's surging roll-up spree has lifted its headcount above 2,300 – up from 2,100 at the halfway point of this year – including 1,100 advisors, but not counting staff added in the United Capital acquisition.