Investment advisory giant Mercer has inked deals to buy two investment consultancies, announcing both definitive purchase agreements separately on Tuesday.
Mercer, based in New York, is set to take over Pavilion Financial’s investment consulting, alternatives consulting, and wealth management businesses, as well Summit Strategies Group in its entirety.
“On the surface, the three firms are really different, but when you scratch below the surface, each firm has customization at its core,” said Rich Nuzum, global head of Mercer’s wealth business, by phone Tuesday.
Given that the deals have yet to close, Mercer would not disclose valuations or term details. Nuzum, however, agreed to share a bit about the deal process.
Mercer approached Pavilion about a potential transaction via a connection Nuzum had to the firm. He said he reached out to Keith Mote — head of Pavilion’s institutional consulting division — who previously worked with Nuzum at Mercer.
The connection led to proprietary deal talks, which eventually led to the acquisition of Pavilion.
“The more we learned, the more interested we became,” Pavilion CEO Daniel Friedman told Institutional Investor Tuesday. “Our clients can benefit from the scale, the research resources, and the global platform.”
Pavilion is headquartered in Winnipeg, Canada, with roughly 300 employees and $685 billion under advisement as of June 2017, according to Mercer’s press release.
“From Mercer’s perspective, the key issue was talent,” Nuzum said. “We knew many of the senior consultants at Pavilion and had worked with them before. We had clients in common. We knew the talent was strong.”
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As for Summit Strategies, which is based in St. Louis, Missouri, Mercer saw an opportunity to build out its non-profit clientele, and both firms their capabilities.
“We believe that having a global research footprint and a robust technology platform will better position us to support our clients,” said Steve Holmes, principal and founder of Summit, in a statement.
The firm consulted on $160 billion in assets as of December 31, 2017, according to Mercer’s press release.
In addition to being announced in parallel, the two deals are unusual in that employees of the targeted firms had a fair amount of transparency into the process, according to Nuzum.
“Every senior consultant at Summit and Pavilion was doing their own reverse due diligence on Mercer,” he said via phone. “It helps that there’s been cross-fertilization. A bunch of people know the respective firms’ details.”
From here, Mercer’s main focus will be on finalizing the acquisitions, Nuzum said. The deals are each expected to close during the fourth quarter of 2018.
