Warren Averett gets investment from Wealth Partners Capital Group


Warren Averett became the latest accounting firm to receive capital from a private equity or investment firm, but in this case the money will go to the firm’s asset management subsidiary, which hopes to make future deals with other CPA firms to acquire their wealth management practices.

Warren Averett CPAs & Advisors, a Top 40 accounting firm based in Birmingham, Alabama, announced last week that its subsidiary, Warren Averett Asset Management (WAAM), entered into a strategic partnership with Wealth Partners Capital Group, a financial services holding company based in Palm Beach, Florida, and HGGC, an investment firm based in Palo Alto, California. Under the deal, the management team of WAAM will remain “meaningful shareholders” while the parent company, Warren Averett CPAs & Advisors, will retain a minority stake in WAAM. The exact financial terms of the deal were not disclosed.

In recent months, a number of accounting firms have announced investments from private equity and other investment firms (see story). The most prominent deal involved EisnerAmper, a Top 20 Firm that announced in August it had received a “significant” investment from TowerBrook Capital Partners, and would split off its non-attest business into an entity called Eisner Advisory Group (see story). Then in September, a Top 100 Firm, Schellman & Co., announced it had received funding from Lightyear Capital and would set up an entity called Schellman Compliance to provide non-attest services. A non-audit accounting advisory firm, CFGI, also announced an investment in September from CVC Capital Partners after receiving earlier funding from the Carlyle Group back in 2018.

In Warren Averett’s case, Warren Averett Asset Management has been around since 1999 as a wholly owned subsidiary. WAAM is already a registered investment advisor that provides wealth management services to clients including high net worth individuals, families, corporate retirement plans, trusts, endowments and institutions. WAAM has grown to $4.3 billion of assets under management. The capital infusion from WPCG and HGGC will enable WAAM to continue with its organic growth as well as expansion through mergers and acquisitions, perhaps with the asset management practices of other accounting firms. WAAM CEO Josh Reidinger told Accounting Today there would be no change at the CPA firm level. “We weren’t looking for just a financial investor,” he said. “We wanted somebody that was truly our partner and just the highest quality people.”

The firm wanted to double the size of its wealth management practice to around $10 billion in assets under management, according to Warren Averett CEO Mary Elliott, in part by acquiring smaller wealth management practices, but it needed the extra funding to do that because simply borrowing money from lenders wouldn’t go far enough. “We began looking for an investor to help us do that,” she said.

She and Reidinger discussed a deal with Wealth Partners Capital Group managing partner John W. Copeland. “We talked about our values and our culture and what we wanted to happen for our clients in the future, which meant better technology, possibly more resources, just a variety of things,” Elliott explained. “John’s group has a background of working with wealth management firms, and we all 100% agreed that we needed to move forward.”

Copeland was impressed with what he heard. “When we first got introduced to Josh and his team, which was probably eight or nine months ago, what we saw was an incredibly well managed business devoted to client service,” said Copeland. “Josh and his team do everything the right way. It’s fiduciary, it’s client centric, it’s planning led and planning first, and it’s fee only. Josh and the management team really had a desire to take what they built and say, ‘We think we can help more people and offer it to more clients, particularly clients who understand our CPA background.’ What got us particularly excited was the ability to take what is a terrific service model, a client orientation, and deliver it to more folks.”

The other backer, HGGC, will invest in WAAM through a recently formed holding company called Aspire Holdings dedicated to investing in the wealth management space. The transaction is expected to close by the end of the fourth quarter. “We are delighted to partner with WAAM and WPCG to invest in a leading wealth management platform with a client-centric approach,” said HGGC partner Neil White in a statement. “We look forward to supporting management’s long-term value creation and growth aspirations.”

WAAM is making plans to acquire the asset management businesses of other CPA firms. “We see a tremendous opportunity to help other RIAs, especially those that are connected with CPA firms, to go out and to do it more,” said Reidinger. “There’s this unique opportunity that has presented itself in the marketplace right now for other RIAs that are part of CPA firms to expand. Our vision is to hopefully connect and engage with other RIAs across the Southeast and maybe even broader, for those that are specifically oriented to CPA firms. Mary and I have had conversations along those lines and we share that vision. We really think that Wealth Partners and HGGC can help us execute that and continue to really grow this business.”

Wealth Partners plans to support WAAM in expanding its wealth management and registered investment advisor practice, perhaps by investing in other accounting firms. “What Josh and I talked about in the early days was there were a number of CPA firms out there that have dabbled in wealth management, but they probably don’t either have the inclination or the ability to invest in it the way you need to in terms of infrastructure, technology, software or operational platforms to really deliver best of breed to the client,” said Copeland. “And so our thinking was Warren Averett Asset Management has done that. Can we take this model and go to the firms and say, ‘Look, you may have a fledgling wealth management operation. You may have a couple of people in your office that do wealth management. Can we help you do it better and serve your clients better?’ We think, totally apart from the CPA model, these are wealth management businesses embedded in CPA firms, and we can go to those folks and say, ‘Look, you don’t have to invest. We’ve done the investing. Why don’t you come join us? And we think we can deliver all that we have to your clients?’ For us that was really interesting. Wealth Partners has made a few investments with different RIA firms, all of which we think are best in class in their silo. We only have three or four partnerships, but they all tend to be very specific around a model or a thesis. And the thesis here is the CPA model, although frankly it’s broader than that too. We’re obviously looking broadly at advisors and RIAs.”

Reidinger distinguishes Warren Averett’s arrangement from the EisnerAmper deal with TowerBrook Capital Partners. “We’re very familiar with what EisnerAmper did, and that’s at the CPA firm level and across their entire organization,” he said. “And while that’s interesting, that’s not what we have here because at the CPA firm it’s business as usual. There are no changes, there’s no infusion of capital or an investment from anyone, much less a PE group. This is strictly within Warren Averett Asset Management, which is a subsidiary or has been a subsidiary up to this point. HGGC, in the pure sense, is a private equity group, but they’re really different in the sense that they are much longer-term capital. They are very patient. They’re very long. It’s not like we’ve got this short fuse with a PE group and it’s got to turn super fast. I would describe part of what’s been so interesting with Wealth Partners and HGGC is a really long-term commitment to one another for a long-term investment here, so this is not some quick turn.”

The CPA firm side of Warren Averett will continue to have a relationship with WAAM and their mutual clients. “We have a very strong relationship with wealth management, Joshua’s group,” said Elliott. “We serve our clients. A lot of our clients are the same clients. We serve them together and we are going to do that going forward. That’s not going to change at all. We will continue to serve our clients together and have a close relationship.”

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