Genstar Buys Stake in Orion, Plans to Merge it With Brinker Capital

Genstar Capital has purchased a stake in Orion Advisor Solutions and said it plans to merge the company with Brinker Capital, one of the biggest turnkey asset management platforms, or TAMPs, with $24.5 billion under management.

The San Francisco-based private equity firm will have an equal stake in Orion with TA Associates, another private equity firm that had been Orion’s majority shareholder since 2015. In addition to TA Associates, Brinker founder Charles Widger, Brinker CEO Noreen D. Beaman, and Orion CEO Eric Clarke, will all invest in the combined business. Other members of the Brinker and Orion management teams will also invest.

Specific terms of the deal, expected to close in the third quarter, were not disclosed.

Brinker had been looking for a capital partner that could help the TAMP improve its technology and streamline the investment management process for financial advisors who use it. The TAMP itself was buying and outsourcing technology services but could “never catch up” to others on its own, Beaman told RIA Intel.

In January, Tony Salewski, a managing director of Genstar, approached Orion about potentially merging with Brinker. Clarke, Orion’s chief executive, has long said his company is looking for ways to grow on a rolling basis, including through mergers and acquisitions. “We were super excited to start discussions with Noreen and her team,” Clarke said.

Beaman hadn’t seriously considered Brinker and Orion might be a good pair until Salewski pitched her the idea, which she called “game changing.” The deal meant Brinker would get the capital it was seeking, plus a partnership with a company it says can make its technology more competitive. 

“It’s just going to give us a leg up. I think it’s game changing and I think it’s going to be hard to compete against,” she said.

With Orion, Brinker will be integrated into advisors’ workstations in a way it hasn’t been previously, through Orion’s model marketplace. “That’s not something we could do on our own,” Beaman said.

In the merger, Orion is making a leap forward in the TAMP space, a growing area of financial services as wealth managers continue to evolve into more holistic service providers and seek ways to outsource investment management. Together, the Orion Portfolio Solutions TAMP and Brinker will have a combined $40 billion in assets. More than 2,000 advisory firms with $1 trillion in assets under administration use Orion’s software.

Brinker is one of the largest TAMPs but it is still small compared to others, at least in terms of market share. Charles Schwab’s TAMP offering has over $50 billion under management, AssetMark has over $55 billion, SEI Investments has $72 billion, and Envestnet has a whopping $185 billion — over 35% of the entire TAMP market, according to estimates by Cerulli Associates, a Boston-based research and consulting firm.

Genstar, which focuses on middle-market companies and currently manages $19 billion, has one of the richest histories of investing in the wealth management industry itself. It was an investor in AssetMark and helped scale the TAMP into one of the largest before it went public in July of 2019.

The private equity firm has made other investments in Cetera Financial Group, a network of financial services firms that includes one of the largest independent broker-dealers, and Mercer Advisors, a Denver-based RIA with more than $15.8 billion, 400 employees and a sophisticated marketing group like few competitors.

“We have extensive experience investing in wealth management and financial technology businesses that show patterns of success, and we believe both Brinker and Orion fit that bill,” Salewski said in a statement Monday.

“We believe that with our efforts to bring the two firms together, we’ll be able to redefine the wealth management industry and capitalize on the powerful market growth trends favoring the merger of these two industry-leading companies.”