Summit Partners Makes $35 Mln Investment in Focus Financial

2006-02-06 00:57 (New York)
By Brett Cole

Feb. 6 (Bloomberg) — Summit Partners, a Boston-based buyout and venture capital firm, paid $35 million for a stake in wealth manager Focus Financial Partners, which is seeking to acquire financial advisers across the U.S.

Boston-based Summit will take an undisclosed stake in New York-based Focus Financial, which has $3.5 billion under management and was founded last month with 25 financial advisers, Focus Chief Executive Officer Rudy Adolf said.

Adolf said a growing number of wealthy people, those with at least $5 million in assets to invest, are turning from brokerage firms to financial advisers. In 2003, 30 percent of respondents surveyed were using brokers compared with 41 percent in 2001, according to the Spectrem Group.

"Registered investment advisers are held to a fiduciary standard by regulators," Adolf, 42, said in a telephone interview on Feb. 3. "They have to pick the best financial product for their clients."

There are more than 20,000 registered financial advisers in the U.S. and Focus Financial has offices in Richmond, Virginia; Cupertino, California; and Providence, Rhode Island.

"People want independent advice," said Kevin Mohan, 42, a partner at Summit Partners, in a telephone interview.

Summit Partners, which raised $3.3 billion in two funds in June, has made 275 investments since it was formed 22 years ago, including in the New York-based developer of trading systems for hedge and mutual funds Liquidnet Holdings Inc. and Chicago-based online broker OptionsXpress Holdings Inc.

—Editor: Fried

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Brett Cole in New York at (1) (212) 617-3058 or coleb@bloomberg.net

To contact the editor responsible for this story:
Larry Edelman in Boston at (1) (617) 210-4621 or ledelman3@bloomberg.net