Credent Wealth Management, a $2.6 billion registered investment advisor headquartered in Indiana, has raised more than $50 million in capital from Crestline Investors, an alternative investment manager, in the form of debt financing.
David Hefty, CEO of Credent Wealth Management, said the firm spoke to 19 institutional investors and one of the main reasons they chose Crestline was because of the private loan structure.
“What stands out with Crestline is that they were willing to come to the table in a private loan-only structure where our advisors still retain 100% ownership of the units, of the stock,” Hefty said. “As our EBITDA continues to grow, our funding simply grows with it. So it's not like this is a single transaction. It's a partnership that can go on forever.”
Since launching in 2018, Credent has completed 12 mergers and acquisitions and grew from about $250 million in assets to $2.6 billion. The investment will help fund additional M&A. It also allows the firm to change its current ownership structure from a heavy equity swap option / lower cash option to a higher cash swap option / lower equity option.
“It also allows us to work more with advisers with a shorter runway, looking for liquidity for their life's work, but also perhaps a permanent exit in two, no more than three years,” Hefty said.
Credent will also now allow advisers to take some chips off the table and sell a minority of shares to the firm.
Hefty said they will also be able to bring back a shared services platform, Advisor Solutions, which will be powered by Orion's technology and provide middle and back office services for advisors. Before 2018, that platform was called Crescendo Max.
“We do not consider ourselves an aggregator. In fact we consider ourselves an 'anti-aggregator,' Hefty said. “Credent was established by its founding group as a permanent firm, striving for excellence in investment, planning and service. And we knew that to achieve this, we would not only need to be able to fully integrate the new offices through middle and back office support, but assimilate them fully into the customer experience and have a single customer experience that spans. across our network of advisors and teams and everything we do.”
The partnership with Crestline continues that work.
Credent will not sell Crestline funds through the RIA; in fact, maintaining this independence was an important aspect of the due diligence process.
“There were some (investors) where this is a requirement to access capital. All of them were immediately delisted,” Hefty said. “We want to not introduce those kinds of conflicts of interest.”
Echelon Partners advised Credent on the transaction.