This publication takes a detailed look at Bluespring Wealth Partners' M&A strategy and its approach to the North American market.

David Canter, the long-time and well respected head of Fidelity’s RIA custodial services, wanted to set himself a challenge and “try something different” when he decided to join Bluespring Wealth Partners as president one year ago. Well, he got his wish.

Fidelity is firmly ensconced as the second largest RIA custodian, trailing only industry leader Charles Schwab, which is still in the process of absorbing its previous nearest competitor, TD Ameritrade.

Bluespring, however, is battling in a much more competitive arena – the cut-throat world of RIA M&A, which is dominated by aggressive players backed by serious private equity money who have bid up valuations to nose-bleed levels in recent years.

To be sure, Bluespring is no slouch. Owned by Kestra Holdings and backed by PE powerhouses Warburg Pincus and Oak Hill Capital (which bought a minority stake from Stone Hill Capital last year), the firm launched four years ago aiming to become an “independent and hybrid RIA support platform” and an RIA aggregator.

Bump in the road
Bluespring got off to a good start, snapping up a number of firms of varying sizes, including five in 2021 and nine last year. 

But halfway through 2023, Bluespring hasn’t closed any deals, in contrast to rival aggregators such as Wealth Enhancement Group, which has closed eight deals through mid-July, Merit Financial Advisors, which has bought six firms, and Captrust, Cerity Partners, Hightower and Beacon Pointe Advisors, which each completed five transactions through June.

And, thanks to two deals this month, Mercer Global Advisors, one of the industry’s most aggressive acquirers, has now also completed five deals this year.

Canter is hardly panicking, noting that Bluespring’s strategy “involves growth through acquisition and organic growth from existing firms” as well as potentially providing “practice management value to all firms we explore partnership with even if they may not be a fit.”

Bluespring remains “actively involved” in the M&A space, and expects to announce deals culled from “a robust pipeline” in the second half of the year, Canter said.

Future prospects
Bluespring has a solid pitch to M&A prospects, said investment banker Brian Lauzon, managing director for InCap Group.

“They allow partner firms to maintain their brand, create leverage by centralizing most business processes, offer, but don’t mandate, value-add services, and provide business management guidance on an as-needed basis,” Lauzon said. “It’s a unique combination of autonomy and centralization that certainly resonates with many RIA firms.”

Canter himself has reason to be optimistic about Bluespring’s M&A prospects, according to industry consultant Mike Papedis, CEO of Fusion Financial Partners.

“Half of deal-making success is in the qualitative factors, including industry knowledge, pipeline discipline, and willingness to adapt M&A strategies based on lessons learned from previous deals,” Papedis said. “David brings this in spades.”

But even an extremely talented executive needs help negotiating the “complicated dance of coordinating a successful M&A pipeline,” Papedis added. “Success requires a proven team of experts on staff from the acquirer to navigate intricate financial and human elements of deal-making, not just the single executive who wields the checkbook.”

New service offering 
Differentiation is also critical in the crowded advisor marketplace and last month Bluespring unveiled a “Blueprint for Growth” service offering which it hopes will boost the RIA’s appeal. The program includes lead optimization that utilizes artificial intelligence, custom digital marketing campaigns, business development as well as marketing coaching and content provided by the public relations firm FiComm Partners.

The Blueprint program is designed to provide firms with “a more comprehensive solution” than is currently available and will enable Bluespring to stand out from its competition, Canter said.

Business model
Bluespring targets firms with at least $1 million in EBITDA, and typically takes majority control. “We go for partial integration,” said Angela Osborne, the firm’s chief operating officer. “We are looking at highly entrepreneurial firms with good organic growth. We co-brand with partners so that they maintain their brand.”

Although Bluespring does use an employee model, Canter calls the arrangement a “brand of co-brands.” Osborne said tight integration wasn’t necessary because “We already have firms with high baseline standards. We don’t dictate to people about how do something.”

As far as regaining traction in the hyper-competitive M&A market, Canter acknowledged that valuations remain high and demand for high quality firms is intense. But Bluespring is prepared to “lean in” to close deals, he promised.