Allen Darby is the founder and CEO of Alaris Acquisitions, a buyer advisory service that helps wealth management firms navigate the complexities of the mergers & acquisition process. Before founding Alaris, Allen launched a firm that pioneered helping accounting organizations move into the wealth management business. In 1999, Allen sold that business to First Global Inc. and subsequently established a wealth management firm which he grew by completing nine mergers and acquisitions transactions. To further focus his expertise on M&A, Allen sold his second business and joined United Capital in 2009, where he sourced and closed 27 transactions that represented approximately 40% of United Capital’s final sale valuation. Today at Alaris, Allen helps local, regional, and national wealth management firms who seek to grow their companies through acquisition.
Allen joins me today to discuss how partnering with other wealth management firms can help financial advisors grow their business to the next level. He describes how the M&A market has evolved throughout his career. He explains how advisors can evaluate potential partners and buyers and highlights three key areas they should consider before entering a partnership. He also discusses three critical things that motivate people to partner with other organizations and underscores the mindset that advisors should adopt when entering into a partnership.
“The industry is grouped at different asset levels. Firms in the half a billion dollar range are two to three-partner firms that made investments into their infrastructure.” – Allen Darby
This week on The Model FA Podcast:
● Allen’s background and how he pivoted from studying biology in college to starting his career in financial services
● How the M&A space has changed over the years
● The autonomy trade-off involved in partnering with another firm
● Different acquisition models and how they’re designed to produce specific economic outcomes
● The monetary drivers of transactions and the three things that motivate businesses to partner with other organizations
● Partnership opportunities and the qualities business owners should look for in potential partners
● How partnering with another firm addresses succession issues
● The “buyer-adviser” model and how it helps Alaris Acquisitions generate a profit
● At what AUM level should financial advisors start considering a partnership with a larger firm
● The smallest and largest AUMs Allen has transacted
● How wealth management firms can move from the hundred-million mark in AUM to a billion dollars
● The boogeyman and how the fear of losing control prevents advisors from partnering with other firms
● Book: The Screwtape Letters, by C.S Lewis
Our Favorite Quotes:
● “While there’s organic and market-driven growth, many firms grow through roll-up strategies.” – David DeCelle
● “Ask yourself whether you’re willing to do the work it takes to move from your level to the next or if you’re better off partnering with someone who’s already built that infrastructure.” – Allen Darby
● “If you’ve built a business that has at some point taken over your life, any firm that acquires you will centralize all of the things that weigh you down.” – Allen Darby
● “Try to identify what you want your life to be like on the other side, because all of the different acquirers that exist have a unique model oriented around autonomy.” – Allen Darby
● “Level of autonomy, economic model, and drive: getting clear on these things can get you through selecting a partner faster.” – Allen Darby
Connect with Allen Darby:
● Email: [email protected]
About the Model FA Podcast
The Model FA podcast is a show for fiduciary financial advisors. In each episode, our host David DeCelle sits down with industry experts, strategic thinkers, and advisors to explore what it takes to build a successful practice — and have an abundant life in the process. We believe in continuous learning, tactical advice, and strategies that work — no “gotchas” or BS. Join us to hear stories from successful financial advisors, get actionable ideas from experts, and re-discover your drive to build the practice of your dreams.
Did you like this conversation? Then leave us a rating and a review in whatever podcast player you use. We would love your feedback, and your ratings help us reach more advisors with ideas for growing their practices, attracting great clients, and achieving a better quality of life. While you are there, feel free to share your ideas about future podcast guests or topics you’d love to see covered.
President of Model FA, David DeCelle
If you like this podcast, you will love our community! Join the Model FA Community on Facebook to connect with like-minded advisors and share the day-to-day challenges and wins of running a growing financial services firm.
Allen Darby 00:07
There's economic reasons to do a transaction and there's quality of life reasons. And you need to determine like, what's the most important to you at this phase of your career. Sometimes, it could not be a great economic outcome in terms of evaluation. But if your quality of life is so much better, you might want to move ahead anyway.
David DeCelle 00:34
Welcome Mandala phase. My name is David de sel president with the model FA and I'm very excited for our guests today, Alan Darby. So Alan is a good friend of ours here in the industry. And just to start off with his quick bio, so Alan has been in the wealth management industry for three decades. To put that into perspective. I've been alive for three decades. So Alan's got a bunch of experience under his belt. And, you know, he started off and founded a highly successful firm that was one of the pioneers in helping assist accounting firms get into the wealth management business, I know that there's a lot of that going on right now. In 1999. He sold that enterprise to first global Inc, out of Dallas, Texas, and subsequently founded a successful ra in Charlotte, North Carolina. With his own RA, he conducted nine mergers and acquisitions, and eventually sold his practice in 2009, in order to focus his expertise in the m&a area. So we're going to be talking a lot about m&a here today. Then, in 2012, Allen took a role and united capital on their new partnership team as a buyer advisor for United. He led a team that sourced acquisition candidates for the firm. During his tenure with United he sourced and closed 32 acquisitions. He his lovely wife, Joanne of 29 years, and two children, Trevor and Ilana, and he's currently residing in Cornelius, North Carolina. Alan, it's been a pleasure getting to know you. Welcome to the show. Yeah, David, appreciate it. I'm looking forward to it. Thanks for having me on. So give me a sense, I want to go through a little bit of your background. So were there any other industries that you had a hand in before joining the financial services, you know, post, you know, schooling and stuff like that? Or did you immediately get into financial services?
Allen Darby 02:27
No, right out of school was 1990 1991. And the economy was just in shambles at that point. So I was a biology major in college. So I wasn't I was really wasn't intending on getting into the business, financial services, I was actually going to go towards the medical profession or be a pharmaceutical sales rep. And so I, I remember my first job interview, there was like 800, interviewees for it. So needless to say, and so that's I took a few gigs. One was as a radio salesperson, I think I sold credit card machines, I did just about anything we could to put food on the table. I got married when I was 22. So I had to start providing, you know, at that early age, and so I did a few things, but ultimately, got into the insurance business that was kind of my entrance into the financial services world was through the risk management side. And, you know, then got my securities license and so forth. That was how I got into the business period definitely didn't start out intending to be in the financial services industry, for sure.
David DeCelle 03:37
What, what firm did you start at?
Allen Darby 03:40
So my first significant, I guess, Job was with Wachovia, yeah, here it is. Yeah, so I was actually what they called a personal investment counselor, managing investments and doing a little bit of planning, but it was more seemed like it was more product pushing at that point that like eight bank branches. So I remember I think I had a few 1000 clients in managed a few 100 million dollars as a 24 year old, 25 year old. And so like, I remember asking my manager like what, you know, I all these people that I'm working with, how am I going to develop a relationship with there's too many, I mean, I need to get involved with them and learn what their values are, and all the rest. And he said, You don't understand. We don't want you to build a relationship with them, we want you to sell these products. So I learned I was in the business, but it was at the wrong place.
David DeCelle 04:31
I gotcha. Now, I guess what attracted you so you transitioned, you know, from, you know, a firm that was helping accounting firms get into the wealth management business and then in starting your own RA, you started getting into the m&a space. So was there like a dual component of some decent organic growth as well as m&a growth? Or were you primarily focused on m&a? You know, back when you started that,
Allen Darby 04:59
no, we We're focused on organic growth, primarily. And as you mentioned, we were we were actually buying some accounting firms with the intent of leveraging Wealth Management into the space. And so my first real foray into m&a was looking at buying an accounting firm, you know, and so that's how I got familiar with it. And it was I've considered it very successful. But that's when I met Joe Taran united when he first started united capital. Want to say I was if maybe they had done one acquisition, but it was either zero or one. And they were talking to us about acquiring our firm. And so I met Joe very early into his career at United. And because we were buying accounting firms, they didn't want to acquire our practice, because that wasn't something they were into. And he gave me the advice of why don't you just if you want to, you know, grow your wealth management business, why don't you just start buying wealth management practices, so financial planning practices, and so I thought, that's a good idea. So we started, we started by wealth management practices. So we did a few of those as well.
David DeCelle 06:10
How have you seen the m&a space change over the years? So, you know, based on my math, right, you joined and or, excuse me, I should say, you started your RA in What 1999? Like, 2000 when you got out? Yeah. The other business
Allen Darby 06:27
was just after the internet, you know, market crashed. So that was when I started. Actually, we we made our first acquisitions probably around 2004. You know, cool.
David DeCelle 06:40
So call it it's been, you know, 20 years, right, give or take, have you seen much of a change in how m&a is working from when you source your first deal compared to sourcing your last deal?
Allen Darby 06:54
Yeah, it's not even remotely similar in any aspect of it. Really. It's the market has just evolved. It's one it's it's much more popular, obviously, today than it was back then. Not the transactions weren't getting done, but certainly not at the volume that we see today. In so I would say the just the sheer interest in it has increased. models have evolved. I mean, back then I wouldn't even say there was a real model. It was just a wild wild west, more or less. And so we and it was more local or regional based, there weren't really any firms that were doing acquisitions at a large national type scale. So yeah, I would say it's, it's definitely evolved. It's gotten much more sophisticated, a lot more capital, a lot more buyers in the space than there was seems like everyone's a buyer today. Right? Whereas back then there just wasn't many.
David DeCelle 07:51
Yeah, I feel like there's a lot of people doing and trying to do roll ups and grow, grow that way, really. And obviously, there's organic growth, but and market growth. But I find a lot of firms are doing that. I kind of want to do a little, little bit of a roleplay. Because I know that in our last conversation that you had one thing that you mentioned is you recently got told, and you get told this a lot when you're on the phone with someone, once you're done going through how all this works, that people say like, wow, that was the most clear and thorough explanation of a transaction they've ever heard. So I want to give people the opportunity to hear that now. So what scenario should we do? Should I be an advisor? who's looking to sell my business? Or should I be an advisor who's looking to buy a business? What what would be a better scenario to roleplay?
Allen Darby 08:45
Well, the most common conversation I have is with someone who's interested, and I'll call it a partnership opportunity, which is code for acquisition. Yet a partnership opportunity is generally what most people are interested to talk to us about, you know, they've requested a meeting with me, mostly because we've asked to talk to them, but they want to understand what's this all about? What's the landscape look like? How are deals structured within should I be thinking about how our evaluations done? So I would say from that lens of a seller, or someone looking for a partnership,
David DeCelle 09:18
okay, so someone so I have 150 million? I'm looking to join a larger firm, correct? Yeah. Okay, cool. So all right. So Annabella roleplay. So hey, Alan, hope you're doing well, I, as I mentioned on our previous phone call, I feel like I've gotten to a point in my business where in order to truly scale I need to be a part of something bigger. I don't necessarily have the vision of like building out this massive team myself, or, you know, having this big conglomerate. I'm at about 150 million right now. I have a portfolio manager on the team as well as an executive assistant. When I'm at the point of, you know, do I hire another advisor or do I hire more staff people Do I join a larger firm? And I'm kind of leaning towards joining a larger firm? I just, I've never had this conversation before. I, quite frankly, I have no idea how this works. So I guess what what can you share with me just to help educate me on this space?
Allen Darby 10:14
Yeah, well, the first thing that I would say is that know when you're thinking about transacting with another organization, and again, we're not talking about specific structure yet, but it's essentially an autonomy trade off, you know, and you make all the decisions in your business today. If you join another organization, you're not going to make all the decisions, you just have to be comfortable with what those decisions you retain, are. And so we call that the autonomy trade. And so when you're looking at, alright, what are the things that I need to evaluate in terms of partnering with another organization, I would start there, you know, in trying to identify what you want your life like on the other side, because all of the different acquirers that exist, have a unique model, in that model largely oriented around this concept of autonomy. And so we have, for example, clients that are highly structured, highly processed, and if you're going to join their team, you're essentially saying I align to their individual worldview. And I see what they're doing is valuable and accretive to my business, and I'm willing to adopt their way of doing things. Okay. On the other end of the spectrum, I have clients that are highly entrepreneurial, meaning they're going to centralize some of your stuff that you're doing. Typically, it's the back office, accounting, compliance technology. But beyond that, they're pretty much going to leave you alone and let you operate as you do today. And then we have everyone in the middle. So there's this spectrum of autonomy that exists out there in these deals, and you need to understand, or you need to have a real concrete understanding of what you are willing to live with. If you start there, you will eliminate a whole host of potential buyers who don't align to what you're looking for. And then the second component of is what are you looking for in terms of economic outcome? You know, there's a few dominant models that exist. Specifically, there's the full acquisition model, where they're acquiring 100% of your business. And then there's a minority acquisition model, where they're acquiring a fraction of your business, each one of those, and everyone tweaks those models, by the way, to come up with our unique take on it. But each one of those is designed to produce a different economic outcome. And so you, once you come to grips with what you're looking for on the autonomy spectrum, then you need to focus on what's the economic outcome that you're seeking. And again, once you get fully aware of what they're designed to produce, that will eliminate a whole host of potential buyers, too. So I tend to start there with someone who says, Hey, we want to explore this is to explain to them how those two components work, the economic ideal outcome you see in the autonomy trade. And from there, you need to start understanding what's motivating you in this transaction. And I find that if you look at the all the transactions that I've been a part of Anyway, there's three themes that really motivate people to consider partnering. And everyone kind of waits these three buckets of reasons differently. Often, if it's a multi partner practice, there'll be partners in the firm that have different weightings of these three themes. The first group would be, we call them the monetary drivers of a transaction. And that's three elements, that's the color the chips off the table, it's a firm who's built a practice, it's got real asset value, and they want to monetize some of that they want to take some cash out of that asset. And so through transacting there can do that, then there's a succession issue to deal with. If you've built the practice, and you don't have that younger team that's going to come behind you and ultimately monetize your business, you've got a succession problem. Also, we find even more commonly, if you do have those people on the team, but there's no structure or pathway to facilitate that equity exchange, you still have a succession problem, so transacting with another firm, often helps solve that or move that succession issue away. And then And lastly, in this monetary group, is the upside, you know, what's the Do you have a desire to take equity in the acquiring entity? Do you want to retain a portion of your EBITDA that you would monetize later, you know, so those are monetary drivers. Honestly, I don't find those to be the primary drivers and most partnerships, the next big, it's important, by the way, you have to have a market transaction, but that's not usually what's really motivating people. The quality of life would be the next big bucket of reasons and that's a firm. I think this is where you are, David, based on what you just shared with me is that you've built a business. The business is now taking over Your life, you know, you started in the business to help clients, whether it's a planning experience and investment value proposition. And as you've grown and succeeded, the realities of the business are encroaching on your personal life, your satisfaction preps, you, maybe you're out of capacity. And so that's a quality of life issue, any firm that's going to acquire you whether it's a full or fractional, typically, they're going to centralize a good bit of the stuff that's weighing you down. So it's all the usual suspects like compliance, you no longer need to outsource compliance or manage that you're going to centralize your back office functions, accounting, billing, HR, technology, all of those things that either you or someone on your team is doing, are going to largely go away, because your new partner is going to centralize that stuff. The next area of quality of life is in the practice management. That's who does what in the office on what days, I find that most entrepreneurs in the wealth management space, while they're really good at working with clients. Most of them are really not good at running the business, they do it because they have to. But they're not great at process and practice management and all the things that when you fundamentally look at a business, that's what makes the business work, you know, and so when you partner with someone, they should be bringing a degree of competence to you in the practice management aspects of it. So it's, it's things that you would go hire a consultant to help you with. But the problem was, typically, when you hire a consultant, you've got to go back and implement everything. So your new partner should have some internal resources that are going to help you, you know, define roles and responsibilities, they're going to help you manage your team, they're going to help get the rainmakers out of non rainmaking functions. They're going to help turn generalists, and the niche specialists, you know, these are practice management, we see that really show up, we track a metric called revenue per employee, most firms when we talk to them are around three to 5000 revenue per employee. So if I didn't know anything about you, David, I would go to your website and count the number of pictures on it, and multiply it times 300,000, I probably pretty close to your revenue. In most cases, when you implement practice management, we see that number start to go up to 400 500. And beyond, that's a quality of life and just getting you out of the stuff that you really don't like I talked to a firm, just this week, and he was complaining about just having to manage his team. You know, they're good advisors who are spending time banging out emails, and complaining that they don't have enough staff and you know, just going on and on about the reality that he doesn't like managing people. Well, that's practice management, that's a quality of life. And then there's access to resources, what does your new partner bring to you in new resources? So all of that's a quality of life. That's where I find the majority of the what drives a partnership. That's where the emphasis is placed, is how is this transaction improving my life in you? And this is you, your team and your clients? And then lastly would be growth? What are they doing to help me grow? After they've cleared the decks? operationally, they've given me all this new practice management expertise, they've got new resources, how are we going to use that to now grow the business, your new partner should have some organic growth or inorganic growth strategy that they're going to bring to the table? So if you go back through all that it's what is your autonomy, your desired autonomy? What's the economic model? And then what's motivating you in this transaction? Is it on a monetary driver quality of life driver? Or is it a growth driver? If you get really clear on all these things, you can go much quicker through the process of who's a good partner for me. So if you were to pose that question, as you did, that would largely be what I would explain. And then and then, of course, if we start, that's what we do. And alera says, we help you unpack all of those things and get crystal clear on what your ideal scenario would look like, cool.
Patrick Brewer 18:45
Hey, man on the face, I know you're enjoying this conversation. But I wanted to take a quick break to talk to you about the model FA accelerator. This is a unique collaboration between us and you, where we help you build a financial advising practice that you can be proud of, we focus on the foundational concepts around how to pick a niche or a specialization, how to price your services, how to construct an offer that people are going to buy, and then how to market it and sell it in a way that will get people to sign on the dotted line and become clients of your firm, all while giving you the information to scale and set up workflows and operational processes that will allow you to reclaim your time and build a practice that doesn't run you. So if you'd like to hear more about that, go to www dot model fa.com forward slash accelerator or www dot model FA comm hover over work with us and click on accelerator and hope to see in the program.
David DeCelle 19:35
So I love roleplay some follow up questions to you. It seems like you're helping transact the m&a itself. And it sounds like but I'm getting a sense that because as you pose those questions to me, I start thinking, Well, what do I want my autonomy to look like? Well, what do I want the financial side of the time leverage and freedom or the growth like whether I want that to look like and I may not have thought about that before. So it seems like you are consultative in nature with them, I would imagine through conversation. So it seems like you'd be putting in a decent amount of work with me like how, whether it's with you or other people maybe talk about the industry in general, and then talk about us specifically, like, how do I compensate you? Is it a percentage of the deal? Is it a retainer? Is the fee like, how's the industry work? And then specifically, how do you work.
Allen Darby 20:26
So if you are a seller, let's say you're looking for a partnership opportunity, you might not know what that means yet, but you're open to the conversation, historically, you've had two routes to go through, you can go try to negotiate one on one with a potential partner or buyer, it's perfectly fine. But if you don't know what you're doing, it can be daunting, you know, if you don't understand how deals are structured, how evaluations are done, and what are the big bolder items to consider, like we just talked about, then it can be, it can be overwhelming to you as a person trying to understand this and but it can work. There are a number of great national firms who have internal m&a teams that are great at helping you vet that, but you might have to kiss a lot of frogs along the way to find the right match. The other route is historically you could go hire a seller advisor, what's known as a seller advisor, typically is like an investment banking firm or a business brokerage firm, there's a lot of really good ones out there that you can hire to represent you to help you understand the landscape and some of the things that we talked about. So you have an advocate an expert on your side, that's helping you guide you through this process, I think it's a better route than going one on one with a buyer. My only issue with this really not that big of an issue, but it's expensive for you. So you'll typically hiring a seller advisor, you're going to pay them a retainer depends on the size of your practice, that usually dictates that but 25 $50,000 retainer, you'll likely be charged progress work progress fees as they go through, because it's a multi month process you're going to go through and they'll charge you some just to cover their basic expenses, and they'll charge you a success fee. On the back end, normally, it's a percentage of your valuation, and all in all, it should cost you probably several $100,000 in total, to help, you know guide you through that process if you hire a seller advisor, but again, I think it's better but then going on with a buyer. So the way we work we are what's known as a buyer advisor. So we actually run a very similar process that you would go through and hiring a seller advisor, except we're compensated by our clients who hire us to find you. Okay, so it's a relatively new model in the business that we think is going to get a lot of traction. The basic bet that you're making when hiring us at aleris is that we have a diverse client base that's representative of the broad market, you know, all the different cultures and economic models and styles and so forth. And that we're not biased in terms of who you interact with. So and we're not, we don't, we have one, we do have a large number of really good clients. And we don't care who you transact with, we just want it to be a good outcome for both our clients and for you, you just have to believe we're not going to influence you to go to one versus another. And we don't the way we handle that is when we get to that point in the process, we'll show you all of our clients and you pick, you choose the one we'll of course, highlight the ones we think make the most sense, but you ultimately choose who you start dating. So our model as a buyer advisor, we think it gets you to the same place as what you would achieve going to a seller advisor. It's just a better economic outcome. So to answer your question directly, David, if you engage with us, and we find a match for you, then it doesn't cost you anything to work with us. So you get the similar experience. I think, if we can't find a match for you, we can convert our agreement to that seller advisor construct where there's not a match within our client base. Now, you'll hire us to go find you a match. And then we would work just like a seller advisor at that point, the only difference, we don't charge a retainer, because we've done all the work of that, you know, we'll spend easily a solid month with a firm like yours, helping them understand, you know how this all works, you know, going through that economic model, the autonomy, trade and all that. So we were I think very similar to a seller advisor, we just were hired where the clients?
David DeCelle 24:14
Cool. I have a three part question. I'm just going to go one at a time. So let's say I'm an advisor, and I say to myself, Oh, I love the idea of having some autonomy, or maintaining some autonomy. I love the idea of getting support on the practice management side. I love the idea of getting some help on the growth side, and then come to find out I have, you know, five or $10 million in a year. Right? That's obviously a lot different than someone who has 150 million in a year. So at what a you m levels specifically, do you think it makes sense for an advisor to start considering partnering up with a larger entity?
Allen Darby 24:58
Right so That's actually a really good question. I think it's not necessarily a un based and why you would consider it. Because if you're at five or 10 million, and you're already experiencing some of these challenges that you know, the complexity of the business and you don't have the time and capacity, then partnering might be a good idea for you now, at that size, the question is, is it through an acquisition or not? Because at that revenue size, I mean, if you're, if let's assume it's an average 100 basis points fee, you're charging, if you're in your clients, you know, you're a 50 to $100,000 producer at that point, well, yeah, valuations are generally done on EBIT da or net revenue. And the reality is, you likely don't have much net revenue at that site. So an acquisition wouldn't wouldn't benefit you, nor would it benefit the buyer. Because there's just not enough cash flow to buy. There's a lot of fixed costs associated with these transactions, that most transactions and again, this is different by buyer, but I would say around a million in revenue is where it starts to make it for both parties, there's enough net income for you to monetize, there's enough that makes it justifiable for them, you know, to go through the process and time, not that you can't transact below that size. But that's when I think it really starts to make a lot of sense, we've done transactions smaller than that, it just, you know, may not be the impactful valuation that you're looking for. But again, there's economic reasons to do a transaction, and there's quality of life reasons, and you need to determine like, what's the most important to you at this phase of your career, sometimes, it could not be a great economic outcome in terms of the valuation. But if your quality of life is so much better, you might want to move ahead anyway. Gotcha.
David DeCelle 26:45
Now, second part to this question is that mind you, I come from the northwestern space, right? So I was there for seven years, much different, obviously, than the RA space. And let's say I'm at Northwestern, I've been there, I'll just use my scenario. I've been there for, you know, seven years. And primarily, I was focused on the insurance side of planning, right risk management, and didn't do a great job of accumulating assets at that time. But I have a book of business of a few 100 clients, where there's a you m opportunity or network opportunity, as you continue to get introductions from those folks. And my attractive at all, from that model into the independent space as it relates to getting anything for that, or does it really come down to how much am I have?
Allen Darby 27:37
It depends on the buyer, alright, so you would just want to find a partner buyer, that values that business, not only from their client value proposition, they embrace risk management, like you do. Also, they understand that business. And as a result of their understanding and comfort with that business, they're willing to put a value on it. So most of our clients, I would say, are looking for that a u m based business, that's their business, not that they don't do insurance, but you know, their 90% of their revenue comes from fi B's. And so a firm like that, who's looking at your business, if you're 70 80%, or higher risk management, that probably wouldn't be a good outcome for you, because they don't value that business that much. And so they wouldn't put a value of any on it. However, we also have clients that love risk management, you know, that is like a core part of their business. And they will look at your practice. And because of their comfort and familiarity with it, they would put a value on it. So it's somewhat dependent on who you're talking to, but you would, and also what you're looking to do, like, Are you looking to transact with someone and keep that mix, you know, heavily weighted towards risk management? Or are you looking to move into the fee based side of the house.
David DeCelle 28:56
So you might want to find a firm who puts a value on it, but also gives you the tools and capabilities to move your business towards that fee based model, understand? And then the final question to the series of questions. So you've done a number of deals, if I combine what he did at United capital, as well as what you did in your own IRA, I think it was like 32, and nine, so call it 41. Probably a multitude of deals since then, obviously, in your business, because, well, that's what you do. Right. So there's been a number of deals that you've executed. From an au m standpoint, what's the smallest amount of a un that you've transacted? And what's the largest amount of AI that you've transacted?
Allen Darby 29:39
smallest, would probably go back to the days when I was buying firms for my practice. Okay, I think the smallest one I did there was like 50 million or so yeah, maybe 40 or something like that, but around their largest that I've been a part of would be around thick 1,000,000,005
David DeCelle 30:00
billion five. Yeah. Cool,
Allen Darby 30:02
cool, kind of a sweet spot is probably that 200 to 400 $500 million size, you know?
David DeCelle 30:09
Yeah. But well, that's when they, you know, people really need to start making a decision of like, well, what am I building here? Right? Am I done growing? Or do I need to expand the team are joining to partner up with someone, so it's probably, you know, at that point in time where they really have to start figuring stuff out.
Allen Darby 30:24
Yeah, it's interesting, if you look at the industry, the groupings of firms at different asset levels, the majority of them are 700 million, you know, in terms of assets, that I see like a grouping around that 250 million range, that's usually someone who's added another partner, you know, so they've gotten up to that level, and they kind of group there, there's another grouping around half a billion that's to partner firm, two, three partner firm who's made some investment into their infrastructure, and, you know, try to move off that lifestyle practice to an actual business, and they grew around to half a billion, then there's like this gap between a half a billion and a billion, which very few firms ever make it through. Because the reality is to go from a half a billion to a billion, you'd likely won't make a lot more money on that journey, right? Your enterprise value is increasing, but you're not taking out much in terms of compensation, because you're having to invested in the business, you know, to go to that, and not a lot of people are willing to do that. So when you're thinking about, should I partner or not? Sometimes that's a part of the calculus is, do I really want to do the work it takes to go from whatever your level is to that next grouping that next level? Yeah. Or am I better off partnering with someone who's already built that infrastructure? And we can just, you know, plug into that and not have to fool with it. Awesome. Before I pivot slightly and start talking about your favorite book,
David DeCelle 31:48
are there any questions that I did not ask that you think would be helpful for either a buyer or a seller to know about how m&a works, I guess, let me ask this question that just came to mind. Sorry, what makes a deal fall through? Like, what do people need to be keeping an eye out for that they can avoid doing all their due diligence, just to fumble on the one yard line?
Allen Darby 32:13
Yeah, that's a really good question. So there's a few things. Overwhelmingly, the reason someone starts and stops, because they get to this point in the process, where they're kind of staring over the cliff, there just the fear of losing control,
David DeCelle 32:31
I said is the overwhelming number one,
Allen Darby 32:33
they get to a point where they just like, you know, what, I get all the benefits that you're espousing, you know, in this partnership, but I'm just not willing to take that leap of faith that as a part of your organization, I'm going to feel like an entrepreneur, I'm going to feel like, you know, I'm not just an employee that's being dictated to, you know, and so I want to retain that. And that's the number one fear of losing control. The second thing is, I would say, they see the boogeyman, they're dealing with a partner. And there's just this fundamental lack of trust. And they see their irrational, let's say, in terms of a variety of things. So fear of losing control, being irrational, would overwhelmingly be the number one thing. I think, following up on that, and to say, having the right frame of mind when coming into the process is really important. In my opinion, it's just being a open minded to open minded to new ways of doing things, you know, it's perfectly okay to say in the same sentence, we're proud of what we've built. But we're open to other ways of doing things. You know, that firm that we're considering partnering with, they actually might do stuff better than we do it. That's not saying that we're not good at whatever we're talking about. But it's just willingness to say we're open to hearing and vetting the value proposition of this new partner. And just keep taking the next step forward. You know, we call it running downhill, you know, there's nothing urgent, you know, there's nothing burning down in their world that's driving the transaction, but they're just willing to explore, they get started and they keep running downhill. And if you do, if you go that take that route, you know, it's a much more enjoyable process to go through. No one's looking to steal your business. No one's looking to take the entrepreneur that's built this whatever the day you M is built this great business and turn them into an employee who doesn't have a say in anything, you know, that's just irrational fear. So that would be
David DeCelle 34:42
cool. So pivoting slightly over to not slightly but totally over to your favorite book. So for everyone listening as you've heard on prior episodes, it's really a goal of mine to promote learning in our industry, I believe in the saying you're either green and growing or right I've been writing. And I find that there's a lot of advisors who become complacent with the new information that they're bringing in. And they don't do that. And then there's another category of advisors, that when they are consuming information, they tend to stay within the confines of our industry to stay sharp for their clients. But I think that there's so much value in consuming books that are outside of our industry, whether it be from, you know, tech companies, or, you know, biographies of certain people. So I guess my question to you, Alan, is what book has had the biggest impact on your life, your business today,
Allen Darby 35:41
I tend to read books that are more intellectual, not pertaining to our industry, like I don't actually get bored reading books about our industry, when I'm in an area
David DeCelle 35:53
Allen Darby 35:54
Yeah, read more articles, or podcasts that seems to be more productive. And I like reading books that are kind of like spiritually oriented, you know, so my favorite authors, CS Lewis, I love reading all of his stuff. And my favorite book that he wrote was a book called The screwtape letters, you know, so it's a very interesting take. It's, of course, a spiritually oriented book. But it's through the perspective of a demon, who's coaching a younger like apprentice demon, on how to influence this man over to the dark side, you know, and so I thought that I loved love that book, when I read it, I've read it probably three or four times, and every time I read it, you'll give me chills, you know, to think about it, but that would be my favorite book, if I had to pick one
David DeCelle 36:41
of it, I have yet to come across that. So I'm on Amazon right now scooping up the audible. So I'll let you know my thoughts like it's,
Allen Darby 36:50
it's entertaining to, you know, books to hold my attention anymore. In this digital age we live in right, there has to be a component of entertainment to kind of keep me engaged. And that's one of the reasons I like that book so much. Sure.
David DeCelle 37:01
Awesome, man. Well, let's say I'm a larger firm, right, I got to the 10 billion in the UN. And I'm looking to really up my m&a game, or on the other side, let's say, you know, I have 100 million, 400 million, 300 million, whatever. And I'm considering partnering up with another firm to solve those challenges that we went through towards the beginning of the show, what's the best way to touch base with you.
Allen Darby 37:29
So you can go to my website aleris acquisitions comm on there is a contact field, you can put it in and it'll shoot me a note saying that you want to meet or you can email me at Allen Ll e in that Darby da, rb y at alerus. Acquisitions calm, and just reach out to us. And we'll get some time on the calendar to have the conversation.
David DeCelle 37:51
Cool. I know, for everyone listening, when I was talking to Alan, when we have our debrief call for this podcast, he had mentioned that the prior month, he had had about 70 calls with owners of RI A's that want to have conversations around selling their business and you know, joining other organizations and the best day that Alan has is when he's talking to people for the first time. So if this is something that you're considering, and you want to begin to explore, I think what I've gathered from you, Alan anyways is you take more of a consultative approach to the relationships that you have, as opposed to like being super salesy or pushy or trying to put people in a certain category, it's more of a discovery oriented factfinding experience to figure out what the best fit is for them. So if you're listening, and you're considering this, definitely suggest that you reach out to Alan, great guy. And you know, clearly from my conversations, and hopefully you've gathered from this conversation, he's not only passionate about what he's doing, but you know, pretty competent, you're in this space, I should say, as well. So for those of you who are listening, as we've been asking on these shows, two things that would be super helpful for us. Number one is if you found value in this or you know of an advisor, or a firm that is considering making some sort of transition, share this episode, give them some context, add some value to them, even though the value is going to be coming from Alan himself, they're going to associate that value with you for making the connection. So feel free to go ahead and share this episode with some of your peers and colleagues. And in addition to that, if you would be so kind as to leave us a review on iTunes that would help us out substantially from a visibility standpoint, making sure more of the industry is getting access to this content and getting value from this content. So as a thank you for that if you simply take a screenshot of that review once it's posted, and shoot me a text with that screenshot at 978-228-2338. Again, that's 978-228-2338. What will happen is you'll get a quick automated response with the link Just click that link and during your first and last name, so I know who it is, it'll get added to my contacts. And then beyond those automated messages, that's the number to communicate with me on. So if you have any one off questions or thoughts, ideas, suggestions, feedback, whatever it may be, you know, feel free to communicate with me there want to connect with me on social media, just simply google, David de sel de ce, E, LL. e. And all my social links will populate there. The one I'm most active on the brave, I think I have the most fun on and it's the most humanizing platform is Instagram, you know, whether it's regular posts or stories. So it gives us a lot of opportunity to get to know one another and interact with one another. So feel free to follow me on there. And if you want to check out the model FA and how we may be able to help you in your business growth, you can simply visit us at model fa.com. So we're going to be now transitioning to the after hours portion. And in the meantime, Alan, really appreciate your time today. I got a lot out of it. So I'm sure the other listeners got a lot out of it. But grateful for the time spent today, man. Yeah, likewise enjoyed it. Hopefully, we'll be back one day. Awesome. Take care everyone. Bye. Well, you mentioned that you're one of the first or the first I don't know, but most people are going to be charging the people who want to sell their business. For the transaction. As you mentioned, you know, the investment banks and whatnot, what made you think of or come up with the idea to go in the other direction and really only get compensated by the buyer, as opposed to the seller themselves.
Allen Darby 41:36
I didn't really think of it, I'm more I stumbled upon it. And it was simply my time with United, you know, Joe Duran, who, you know, I love he's, he's not much older than me, but I kind of think of him like, as a father figure is definitely a mentor in my life. And that was the route that we chose with them. So all the years that united, I never was an employee for United. Okay, we're an independent contractor, but they were my only client. So I did that for a solid seven years before I even knew the term buyer advisor really was a thing. You know, it's, it's not uncommon in the m&a landscape, there are plenty of buyer advisors. I don't know of any other that's solely devoted to the wealth management space, there could be one I just, I don't know who they are. I've looked, yeah. But when we sold to Goldman Sachs, more or less, the show was over for us doing more acquisitions. So I thought, well, it works so well for United is gonna have to work for other firms to there's got to be a number of firms who want to grow by acquisition, but they don't have the internal m&a team, they don't know how to run the process. And they might be interested to work with us. So when I left, that was actually one of the things I was most worried about, you know, because in all the transactions that we did, I think we did 30 some 33 transactions for United. Every time there was a press release, it was Joe Turan, or Matt Brinker or someone like that, who was in the press releases existed. So I thought, wow, I was about a flopper. It's gonna be a home run. And so far, it's taken off, and we're easily doubly as busy as we were ever the days of United capital. So, love it.
David DeCelle 43:13
So you were working at like you had your own firm. And you were contracted by United? Is that how it worked? But you basically lack a better way to put it maybe exclusively worked with them at the time, or what was that?
Allen Darby 43:24
Yeah, no, I when it started, it was literally just myself. As I mentioned, I knew Joe because he talked to us about buying our firm years ago. Yeah, but he did. He didn't want to buy it because we were buying accounting firms. But we stayed in touch over the years. And I sold it in 2009. And took a year and a half off and decided, Hey, I'm gonna get back into the business and went out to the Schwab conference, which is where we had custody before I thought, Hey, I'll get I'll go see what's going on since a year and a half that I've been off, and I was standing in the vendor Hall and I was thinking to myself, I bet Joe Turan is here. And he just walks right in front of me not 15 seconds later. And so I called my wife and I was like, you're not going to believe, who just walked in front of me. And you know, I grabbed them. And we talked and she said, You know, this is like the third time that you had the opportunity to do something with Joe, I think God's telling you something, you might want to pay attention to that. So he took a leap of faith in working with me, but we structured it as an independent contractor. So I started with myself. And over the years, we built it up to a team of like eight people.
David DeCelle 44:29
Nice. So must be a fun journey. And I mean, I get energy from connecting people. And that's what you're doing and getting compensated for it, you know pretty well, so it must be a fun ride.
Allen Darby 44:39
It is this is when someone builds a practice. They're in their team, you know, it's like it's their life work in most cases. And so when they're thinking about this, it will probably be their biggest transaction financially they ever do. Right And not only is it a big financial transaction, but there have their team that they love and care about. They have clients they lose.
David DeCelle 45:01
their identity is
Allen Darby 45:03
a huge amount of emotion. Even with the most analytical guys, when they get to that point of actually doing a deal, the emotions come out. And I don't know, we call it the freakout point, we don't know when that freakout point is going to happen, it's gone. Sometimes it happens earlier, sometimes it happens late, but we know it's coming. And we just have to be ready to catch them and let them know it's gonna be okay, you know, having done so many, you know, we can point to a lot of success, to make them feel a sense of comfort, but it's definitely something we take seriously understanding the gravity of the transaction,
David DeCelle 45:35
and you probably serving as their consultant serving as, you know, their m&a, transact, or serving as their psychologists, best friends, etc. So they keep in touch with me love it. Well, like you said, it was, you know, probably going to be the biggest transaction of their life. So, you know, it's good to stay in touch beyond that. So it doesn't feel like a transaction, per se. Yeah, we
Allen Darby 46:01
say terms like transaction and things like that. Because, you know, from a legal perspective, that's what it is, it's really is a decision to, to move into a different world, you know, and it's a really big one. And so it takes a lot of care takes I mean, average time it takes to get one of these done is usually around five to seven months. So it's not something that you flip a switch and do you know,
David DeCelle 46:24
right, cool few, a few Would you rather questions then throw at you, just to get you thinking, first one is fairly morbid, so don't worry, it will liven it up a little bit afterwards. But the first one is, would you rather know when you're going to die? Or how you're going to die?
Allen Darby 46:44
Then, you know, this is a great question. Last night, literally, I was dreaming about this. So it's funny you asked us Wow.
David DeCelle 46:52
Allen Darby 46:54
I think I would like to know, when I was gonna die. Not how the how could freak me out. It was something tragic. You know, I want to I don't want to see that one coming. But maybe no, like when it was gonna happen would help me be able to plan or prepare better for my loved ones and such. But I'm not interested if I'm going to get hit by a bus or get choked out on the street somewhere. I don't want to know that.
David DeCelle 47:19
That's the thing. Yeah. Yeah. It's like a car accident or something like that. It's like every time you get in the car like this advice, right? Would you so I feel strongly about my answer here. I'm curious to hear yours. Would you rather lose the ability to read or lose the ability to speak?
Allen Darby 47:38
Oh, wow, that's a good one, too. That's one that kind of requires some thought, I think. So you didn't say lose the ability to see just the ability to read? Yeah, I think I would lose the ability to read. Because if I kept the ability to see and hear, I could do audio books, and maybe watch movies and things like that. But yeah, I think I'll go with the lose the ability to read.
David DeCelle 48:04
So I felt strongly the opposite. But I'm now convinced the other way. So I guess it wasn't that strong, because I was thinking, if I can still read, I can still learn. And this is so silly of me because I don't read books. I listen to books. And really, the immediate thing that came to mind is if I can't read, I can't learn anything. But you just debunk that for me. So I appreciate that. I will agree. And then finally, would you rather never have to wait in line or always have a parking spot no matter where you went?
Allen Darby 48:38
Oh, easily not have to wait in line. I hate waiting in lines. Like that's something I'm known for amongst my friends and families that my impatience with stuff like Nancy, you know, if I get in a grocery line or something like that, and I'm literally counting the seconds how fast the person is moving the food across the whatever the conveyor belt is, yeah, so standing in line, I hate waiting in line. So that's easy with for me
David DeCelle 49:04
one more bonus one because I was just scrolling and I saw this and I would say either way, I'd be screwed. Just because you know from college life all the way through now and my professional life and personal life. But would you rather have all of your Google searches or all of the photos on your phone made public incriminated you the way I answer? Yeah, I could never I could never run for president.
Allen Darby 49:34
I would probably go with Google searches. Most of my stuff's pretty boring that I'm searching for. And I don't know pictures that are on my phone. So my I'll go with Google searches because I think it'd be a lot a lot safer on that one. There might be an incriminating photo or something on my phone.
David DeCelle 49:51
I'm not aware. Yeah, the same when I was in college. Like my uncle's always tell me. You know, when they were in school, they're like, yeah, none of this stuff got documented and You know when I'm in college like everything got documented, so definitely some incriminating stuff in there so appreciate you having fun here towards the end of the after hours and for everyone listening appreciate you sticking around hopefully got a couple laughs hopefully got you thinking as well as some of those which are added questions and now I know we have a professional relationship you know set up but it's nice to also work on my in yours personal relationship and our prior call and today so grateful for your time and thank you for spending some time with us.
Allen Darby 50:31
Yeah, I love it. I had a great time. Appreciate it and look forward to get to know you better.
David DeCelle 50:37
Awesome. Take care, everyone.