For the first time since private equity swooped in three years ago, the parent company of CLS
is about to acquire, adding a turnkey asset management platform (TAMP) to its mix of advisor-focused companies.
, executive chair of NorthStar Financial Services Group
, confirms that the Omaha, Nebraska-based company is acquiring
Hebron, Kentucky-based FTJ FundChoice
from New York City-based Seaport Capital
, a private equity firm. FTJ is a TAMP that had about $9.5 billion in assets under administration as of the end of 2017. NorthStar is backed by another private equity firm, Boston-based TA Associates
. Watch for NorthStar and its companies to do more M&A.
The pricing and terms of the FTJ deal were not disclosed. The deal is expected to close on May 21, says Eric Clarke
, CEO of NorthStar's Orion Advisor Services
(a portfolio accounting software shop and one of FTJ's soon-to-be sister companies).
"This is a company that's done extremely well," NorthStar's Baum tells MFWire
. "It's a fair price."
The FTJ deal will be NorthStar's first acquisition since TA bought
a majority stake in NorthStar three years ago. Baum says he's open to more M&A, though he has no specific targets in mind.
"I wouldn't rule anything out," Baum says. "One of the advantages of having a partner and a partner that is a private equity firm is that it does give you access to capital."
"We're pretty strategic and selective," agrees Ryan Beach
, CEO of CLS Investments, an ETF strategist and mutual fund shop within the NorthStar family.
Orion's Clarke describes the FTJ deal as "the first one that made sense on all fronts" since TA bought NorthStar.
"We have had TA Associates as our capital partner for three years now," Clarke says. "This is our first acquisition but we have looked at literally dozens and dozens of acquisitions."
"We looked at a bunch of things in the marketplace," NorthStar's Baum agrees. "The one that really struck us was FTJ FundChoice."
The FTJ deal, Orion's Clarke adds, "opens up a lot of additional opportunities on the acquisition landscape."
, president and CEO of FTJ, will continue to lead the firm as a company in the NorthStar family once the deal closes. His team will remain based in Hebron, outside Cincinnati, Ohio.
"We have about 92 people," Cook tells MFWire
. "The intent is to bring the entire team over. We run a pretty efficient operation over here."
"The first and most important piece is to make sure that we integrate FTJ FundChoice into NorthStar and Orion," NorthStar's Baum says. "This will be a big bite for us."
FTJ has been an Orion client since 2010, FTJ's Cook notes, and he sees the two firms as natural allies in support of independent advisors.
"Eric [Clarke] and his firm are providing the technology. We're providing the turnkey asset management platform that always ends up part of these enterprise deals," Cook says. "It's a great fit."
"Eric Clarke and I are just going to work more closely together in developing combined solutions for advisors, specifically firms that want a private-labeled, turnkey asset management platform for their particular broker-dealer or large RIA," Cook adds.
"For us it was all about buying that culture and the leadership team that Dean [Cook] has built at FTJ," Orion's Clarke says. "This is a tremendous opportunity for us to step in and really expand the breadth of services that we offer at Orion."
"We think the acquisition of FTJ FundChoice will accelerate NorthStar's ability to services advisors' needs with a complete, fully-integrated solution, while also enhancing each firm's efforts to grow independently," states Roy Burns
, a managing director at TA.
"We've built our reputation on being able to create a really strong offering for our advisors," NorthStar's Baum adds.
As for CLS, the strategist is already one of the more than 30 institutional asset managers whose offerings are available on FTJ's platform.
"We've had a great relationship with FTJ over the years," CLS' Beach says. "Having a managed account platform under the NorthStar umbrella really just widens out the suite of services available to an advisor."
"We might be able to create more customized, private wealth solutions," FTJ's Cook says of working with CLS.
Overall, NorthStar's Baum says, it's "not a huge mystery" that NorthStar is buying FTJ.
"It's a great business to own," Baum says. "We know the business well. We know the leadership team. We've watched the extraordinary growth that they've had."
, owner of insurance agency Forest J. Jones & Company
— hence the "FTJ" in FTJ FundChoice — founded the TAMP in 2001 as a no-load and load-waived mutual fund platform for 403(b) and 457 platforms, FTJ's Cook says, and it later added its strategist platforms. Seaport bought FTJ in 2012, the year Cook rose to president, when FTJ had about $2.5 billion on its platform. Since then, Seaport partner Bob Tamashunas
says, FTJ has seen "incredible growth in recent years."
"We want to thank Dean and the entire FTJ FundChoice team and wish them the greatest success in the next exciting chapter for them and the company," Tamashunas states.
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