Shannon Eusey has built Newport Beach’s Beacon Pointe LLC from a UCLA school paper into the largest female-led registered investment advisory firm in the country, with more than $20 billion in assets under management (AUM).
Now she’s entering even bigger financial circles: her firm last week received a 50% investment from one of Wall Street’s best-known investors, KKR & Co., (NYSE: KKR), which has $429 billion in AUM and a $45 billion market cap.
“There was an opportunity to partner with somebody who has significant experience in wealth management,” Eusey told the Business Journal.
The investment is the latest signal of Wall Street interest in Orange County wealth managers.
Earlier this year, Irvine-based Acorns Grown Inc., which has about $5 billion in assets, filed paperwork for a forthcoming public listing that may value the micro-investing firm at $2.2 billion.
In 2019, Goldman Sachs paid $750 million to acquire Newport Beach’s United Capital Financial Partners Inc., which had $25 billion in assets at the time of the sale. Joe Duran, who founded United Capital in 2005, is now a managing director at Goldman Sachs, overseeing its personal financial management unit.
Since Eusey co-founded Beacon Pointe in 2002, it has grown to 10,000 clients with assets ranging from $2 million to $100 million.
“With its differentiated model, thoughtful approach to growth and exceptional focus on client experience, Beacon Pointe is well positioned to continue gaining share and scale within the growing and highly fragmented U.S. RIA market,” said Chris Harrington, a partner who leads KKR’s Financial Services investment team.
It’s the second-largest woman-run financial firm from OC that KKR’s invested in, in recent years.
In 2017, then Irvine-based fund of hedge funds Pacific Alternative Asset Management Co. announced plans to join with a unit of KKR to form a firm with $34 billion in assets under management, called Paamco Prisma.
Paamco’s co-founder and CEO, Jane Buchan, left the company after that deal was completed and now runs Martlet Asset Management, an independently owned hedge fund based in Newport Beach.
Abry Exit
In March 2020, Abry Partners, a Boston-based private equity firm that typically targets investments in the $20 million to $200 million range, bought a minority stake in Beacon Pointe. Abry will exit its minority stake because of the KKR transaction.
“They did well on their investments,” Eusey said. “They were fabulous partners. We’ll work with them in the future.”
Over the past 18 months, Beacon Pointe has grown by $10 billion AUM and has nearly doubled its professional staff to 280.
With eight acquisitions already closed in 2021 and several more expected to close before the end of the year, Beacon Pointe said it’s on pace for its busiest year yet.
Eusey said she expects a similar expansion in the coming year.
Beacon Pointe, which has 27 offices nationwide and some 110 financial advisers, is looking to new metropolitan areas, as well adding wealth managers in areas where it’s already located.
“There’s a tremendous amount of opportunity,” Eusey said. “We’ll put a beachhead in these areas and tuck in some additional firms into these existing offices.”
Beacon Pointe said the KKR investment will provide Beacon Pointe with growth capital to continue its national expansion, as well as further investments in technology, personnel and employees’ professional growth.
B Grade
The idea for Beacon Pointe occurred when Eusey wrote a business plan for an entrepreneurial class for an MBA at the University of California, Los Angeles. She received a B on the paper because the professor didn’t think it would work.
Eusey, who was honored in 2017 with a Business Journal Women in Business Award, started the business with her father, Garth Flint.
“It is really something to think back to our humble roots when we founded Beacon Pointe 20 years ago,” said Flint, who was also a co-founder of Newport Beach’s Canterbury Consulting Inc., which has $28.4 billion in assets under advisement and management.
“I am very happy to see our institutional origins and entrepreneurial spirit still intact through our ongoing growth.”
Beacon Pointe is also establishing a nonprofit that will open Jan. 1 and be led by Flint and Mark Moehlman, a partner and managing director.
Financial terms of the KKR investment were undisclosed. The transaction is expected to close before year-end, subject to customary closing conditions.
Goldman Sachs served as the exclusive financial adviser to Beacon Pointe and Alston & Bird LLP was its legal counsel. KKR’s financial adviser was Ardea Partners LP and its legal counsel was Kirkland & Ellis LLP.
