International Assets sells to family office to seal founder's succession

The CEO of a 41-year-old independent brokerage with about 250 financial advisors and $4 billion in client assets found his succession plan in a family office.

Orlando-based International Assets Advisory and its parent holding company Pecunia Management, which owns four related brokerages and registered investment advisory firms, sold a majority stake to Cleveland-based Brownhelm Capital on April 10. The parties didn't disclose financial terms, although International Assets CEO Ed Cofrancesco said in an interview that he and Managing Partner Jeff Winn will retain "large" minority stakes when the deal closes and the firm operates as an independent subsidiary of Brownhelm.

International Assets will keep the same management, brand, clearing firm, custodian and other operations in place under the deal. Cofrancesco, 60, plans to step down as CEO in five years but remain involved with the business, he said. 

Family offices serving ultrahigh-net worth clients comprise a growing segment of the wealth management industry, with some buying up RIAs and others recruiting wirehouse teams to burgeoning offshoot practices. Cofrancesco declined to identify the family that launched Brownhelm, but the buyer's website shows it has already invested in an RIA, a hedge fund, a real estate firm and a software company.

"The first thing it allows us to do is have a definite plan of succession — you have to have that, whether you're an individual practitioner or firm," Cofrancesco said. "I can't tell people I'm going to be here forever. I wanted to make sure there was continuity."

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The family office will provide Cofrancesco's firm with growth capital for potential acquisitions or recruiting and additional back-office aid such as human resources. RIAs and some family offices have, in turn, identified the need to buy brokerages in some cases, said John Eubanks, managing partner with investment banking firm Park Sutton Advisors, a Waller Helms Company. The brokerages enable the buyers to "kill two birds with one stone" while enjoying lower prices than the continually rising ones for RIAs, Eubanks said.

"A lot will be looking to acquire broker-dealers so that they will have a broader offering for advisors who aren't just fee-based or fee-only," he said. "A lot of the larger RIAs have actually started broker-dealers or acquired broker-dealers for that reason. The multiples haven't reached the same levels for broker-dealers as RIAs."

Family offices deriving from fortunes in finance or making deals in wealth management or adjacent fields are displaying interest in more acquisitions in the industry, according to Peter Nesvold, a partner at investment bank Republic Capital Group.

"It's an industry that they know very well, and it has served them well over time," he said, describing succession as "probably the most important driver" of M&A deals. "Pretty much the entire industry is going to turn over in the next decade or so," he added.

As the No. 39 firm on Financial Planning's annual IBD Elite rankings of the largest independent brokerages, International Assets' business jumped 20% in 2021 to $49.9 million in revenue. Besides International Assets, Pecunia's stable includes three other separate but related companies: brokerage firm Primus and RIAs called International Assets Investment Management and Global Assets Advisory. That structure, which is similar to most independent brokerages, enables the parent to separate various business lines, according to Cofrancesco.

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With many smaller and midsize independent wealth management firms folding into larger partners in recent years, Cofrancesco said he had been "approached a million times" by potential buyers over the past decade and a half. The suitors primarily came from private equity firms or RIA consolidators, but he said he worried that International Assets would lose its corporate culture under a larger organization or find itself quickly spun off down the road when an investor sought to monetize its stake in the firm.

"Brownhelm has a deep history in financial services, and we have tremendous respect for what Ed has built here and the company's robust performance under his leadership," Max Weber, Brownhelm's director of investment strategy, said in a statement. "IAA is a great company and we look forward to working with Ed and his outstanding management team to continue to grow the business and present new opportunities and additional support to IAA's network of advisors." 

The two sides met each other about a year ago through a mutual friend who consulted each of the firms about a potential business transaction, according to Cofrancesco. After launching International Assets in 1982, Cofrancesco said he's "more energized than I have been for a long time" by the deal.

"I've always been one of these high energy, optimistic and upbeat people," he said. "I like collaboration, and this gives us collaboration in a collegial environment, as opposed to being out there on your own by yourself. It makes me super-energized."