Summit Strategies' public DB consulting unit will be bought by AndCo Consulting
Mercer on Tuesday announced it acquired the investment consulting business of Pavilion Financial Group as well as the defined contribution consulting and outsourced CIO businesses of Summit Strategies Group.
Mercer is acquiring all of Summit's businesses except for public defined benefit plan consulting, said a Mercer spokeswoman. Investment consultant AndCo Consulting said in a news release it agreed to acquire Summit's public DB consulting business. Officials at AndCo and Summit could not be immediately reached for further details.
Terms of the deals, which are expected to close in the fourth quarter, were not disclosed.
Pavilion, based in Winnipeg, Manitoba, had $685 billion in worldwide assets under advisement as of June 30, Mercer said in a news release. St. Louis-based Summit had $160 billion in AUA as of Dec. 31. Mercer had more than $11 trillion in AUA as of June 30. AndCo had $77.2 billion in AUA as of June 30, 2017; AndCo's AUA is expected to rise to $115 billion following the Summit acquisition, according to its release.
Pavilion and Summit "both have great talents," Rich Nuzum, Mercer's president, global wealth management, said in an interview. "They have Mercer alumni in leadership positions, we have their people in roles here, and we have clients in common with them. We've seen what they can do in competition with them."
Also, Mercer was attracted to Pavilion's and Summit's alternatives consulting capabilities, Mr. Nuzum said. "Alternatives consulting is in greater demand globally," Mr. Nuzum said. "These acquisitions will double our global footprint for alternatives."
Mr. Nuzum added that, from the perspective of Pavilion and Summit, "it's hard for privately owned organizations to build out a digital research platform and to have a global (outsourced CIO) presence. They'll now have access to the largest OCIO platform as well as the expanded digital platform that we've built."
Mercer had $242 billion in outsourced CIO business as of June 30, the spokeswoman said. Pavilion had $5.3 billion in outsourced CIO assets and Summit, $3.8 billion, both as of March 31, according to Pensions & Investments data.
Pavilion will retain its brand in its U.S. non-profit and insurance client business, Mr. Nuzum said. The remaining Pavilion businesses in alternatives, defined benefit, defined contribution and wealth management will be rebranded as Mercer.
Joining Mercer as divisional leaders, Mr. Nuzum said, will be Keith Mote, president and managing partner of Pavilion Advisory Group, Pavilion's investment consulting unit; Donn Cox, president and managing partner of Pavilion Alternatives Group, the company's alternative consulting subsidiary; and Dave Holt, managing director of Pavilion Investment House, its Canadian wealth management business.
Pavilion's brokerage business, which is not part of the Mercer acquisition, will continue to be led by CEO Daniel Friedman.
Steve Holmes, founder and principal of Summit, will become a senior strategic adviser at Mercer, Mr. Nuzum said.
Industrywide, Mr. Nuzum said, he expects the global investment consulting business to continue to consolidate, particularly in the U.S., although he believes that instead of larger firms snapping up smaller consultants, the industry will bifurcate into those larger firms like Mercer and smaller, niche specialist consultants.
"Areas like OCIO, manager research, all of these benefit from scale, which is why we've become a serial acquirer," Mr. Nuzum said. "Other firms are feeling this pressure as well ... But there will be a place for the specialist consultants as well."