MAI Capital Management’s Rick Buoncore
What he learned buying MAI and why he took on an investor
When Richard J. Buoncore’s BC Investment Partners bought MAI Wealth Advisors in 2007, the combined wealth management businesses had about $900 million in assets under management. Buoncore adopted the MAI name and in the 10 years since, the business has grown five times over.
To fuel more growth, Buoncore took on a minority investment from West Palm Beach, Fla.-based Wealth Partners Capital Group in a move that took him from being the hunted to the hunter.
Smart Business Dealmakers sat down with Buoncore to talk about his experience buying MAI, his vision for the deal and why the Wealth Partners investment makes sense for his firm. What follows is a transcript of the above video, edited for readability.
Acquisition of MAI Wealth Partners
Over 11 years ago, I was given the opportunity to bid on a company called MAI. I had just left KeyCorp as CEO of Victory Capital Management. I started a small little boutique investment management firm, and I got a call that said there’s a firm down the block and you should look at buying it. I laughed. And I said, “We’re three people here. How are we going to buy any firm?” And they said, “No, really; you’re perfect for this.”
I got the book, and as I started going page by page through the book, I did realize that it was a perfect opportunity for me. Well, sure enough, I made it to the final three and was very disciplined in the approach we took.
In the final three, we lost initially. We lost to another large, well-known firm — I won’t say who it is on camera. But over that time of them trying to get the deal done, they couldn’t get it done. So lucky for me, they called me back about four months later and said, “We couldn’t complete the transaction. Would you be interested?”
I was able to do that, and I think it taught me a couple of great lessons. One is be patient. The second lesson is, when the first transaction didn’t go through, I withdrew my offer so my initial offer was not what I was bound to do. I was able to renegotiate the price. The third thing is it just taught you that, if you do stay to your disciplines, and if it’s meant to be, it will be. And it worked out just as well as it could’ve possibly worked out.
Have a vision of the future
Whenever you do any transaction, and in any evaluation process, it’s really important to come up with what your vision of where you’re going to take the company — what you think you can produce from that company versus what it’s currently producing. In the case of the acquisition of MAI, it was clear to me there was one thing that they did exceptionally well, and that was really the ability to take care of their clients.
What they didn’t do as well was run a business, so it gave me the opportunity to sit back and say, OK, if we have a professional manager doing this, what could we do with this business? What do we need to do? What do we need to invest? What do we think those investments will return? And where can we take this business?
And so vision is a critical part of any acquisition, because if you can’t figure out — if you’re just going to put one and one together and get two, there’s no incremental value or benefit of doing that. But if you can put one and one and get three, four or five, then you’ve really added tremendous value for yourself, your shareholders, your clients and everybody involved.
And over 10 years it’s been a great opportunity. We started with $900 million under management with 50 people, and today we’re at 95 people with $4.5 billion under management. And that wasn’t the easiest 10 years to do it over with a 2008-2009 period, but it’s been a great learning experience for me, and I’m just very proud of what our team has built.
Investment by Wealth Partners Capital Group
Our recent transaction with Wealth Partners has many benefits, but the biggest benefit is they bring a team of seven people that are experienced in M&A. They’re essentially my strategic development group, and so I have them every day at my beck and call to help identify, help vet, help due diligence, structure, help finance any acquisition we want to do.
In an organization of our size of about close to 100 people it’s very difficult for me to run my business, take care of my clients, and do M&A activity. But with them as partners, it’s an unbelievable resource that we have with them being an owner. And they own the same equity I do, so they have the same vested interest I do. It’s not like they can do the deal and walk away and if it works, it works; if it doesn’t, it doesn’t. They have their own equity on the line. So having someone who’s done hundreds of deals — a team of people — is just an enormous strength for us.