Merit Financial Advisors, a registered investment advisor with $19.94 billion in total client assets, has agreed to sell a minority stake to Constellation Wealth Capital as the Atlanta-based RIA’s current minority stakeholders exit.
Constellation, a private equity firm founded in 2023 focusing on wealth managers, will support Merit’s continued expansion through acquisitions, advisor recruitment, and further investments in technology and client service. The transaction is expected to close in the third quarter of 2025. Terms of the deal were not disclosed.
Merit CEO Rick Kent and President Kay Lynn Mayhue said in a joint interview that the firm started conversations with potential new investors over a year ago, holding about 20 meetings amid many interested parties.
“There’s a lot of interest in the space, and there was a lot of interest in Merit, and so that was always affirming,” Mayhue said. “It’s kind of like your home. You put it out there to the market, and you really love it and are proud of it, but are others going to love it? We got confirmation through this year-long process.”
Mayhue said Merit was seeking to prepare for its next chapter, which included buying out a few retiring partners and reworking the firm’s equity and debt structure.
Kent said the deal with Constellation will likely be “at least a five-year partnership,” though there is no specific timeline for the investment stake.
Through the deal, Wealth Partners Capital Group and a group of investors led by HGGC’s Aspire Holdings are selling their minority stake in Merit, made in 2019.
Kent said Merit wanted a similar capital partner to those earlier investors.
“We felt pretty good about Merit’s growth and building the RIA of the future and really putting back into our people, and so we wanted to continue on that trajectory,” Kent said. “We wanted to make sure that we had control of that destiny. … We don’t want somebody coming in and, you know, changing up the game when it’s working so well.”
Merit was talking with potential investors even as it worked through a July 2024 breakup with LPL Financial as its broker/dealer and custodian to move its assets to Purshe Kaplan Sterling Investments. The RIA also continued making acquisitions, booking eight deals this year and seven more signed letters of intent.
According to the Merit leaders, Constellation rose to the top due to its “cultural fit,” industry relationships, domain expertise, and minority, non-controlling setup.
“It was a tough decision,” Kent said. “We had to look at it and say, what’s the best cultural fit? Set the numbers aside. … We are going to grow in the future—we’re not that worried about the numbers. We (had) to find someone that we feel we could really work with. That’s why Constellation really popped to the top.”
Constellation, founded by former Emigrant Partners CEO Karl Heckenberg, has made several recent investments in wealth management firms, as have other minority investors, including longtime player Merchant Investment Management and newcomers Rise Growth and Elevation Point.
“We are thrilled to partner with Rick, Kay Lynn and the entire Merit team,” Heckenberg said in a statement. “Merit has demonstrated a unique ability to scale while maintaining strong cultural cohesion, delivering exceptional service to clients, and attracting top advisor talent.”
The investment will fuel further acquisitions for Merit, which has grown to 40 offices and about 300 staffers. According to its leaders, it will also help the RIA accelerate net new organic growth, currently tracking at about 8%.
“We’ve got a number of [organic growth tracks] that are just getting started but are seeing early success,” Mayhue said.
Those include partnering with community banks, property and casualty insurance agents, CPAs, and custodial referral programs.
Mayhue said Constellation will be “additive” in those efforts, adding that there “was no traditional PE firm that we were in talks with that was going to offer that kind of industry expertise and be additive to both the non-organic and the organic growth.”
Kent and Mayhue said their organic growth goals are ultimately double-digit. The firm is pursuing various pathways to get there, including leveraging workplace retirement plans and employee stock ownership plans, and approaches such as acquiring a firm with a popular YouTube channel earlier this year.
“When you look at the future of organic growth and how people are being reached in any environment, social media and digital [channels] are definitely going to be a focus,” Mayhue said.
Merit’s assets include $14.06 billion in advisory, $2.6 billion in brokerage assets and $3.28 billion in retirement plan and ESOP assets.
Ardea Partners was the lead financial advisor for Merit, and Holland & Knight and Kirkland & Ellis were legal counsel. Goldman Sachs & Co. was the financial advisor for Constellation, and Gibson, Dunn & Crutcher was the legal counsel.
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