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What Goldman Sachs Might Be Getting Out of United Capital Purchase

By Crucial Clips     May 17, 2019
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.

MRINALINI KRISHNA, REPORTER, FA-IQ: Good morning. I’m Mrinalini Krishna, reporter for Financial Advisor IQ, and I’m here in Washington, D.C. at the Finra Annual Conference. With me today is Mark Casady. He’s the general partner of Vestigo Ventures.

With the news of Goldman [Sachs] acquiring United Capital and entering into the RIA space, what is your view of the Goldman transaction and what does it mean with new big money coming into the RIA space?

MARK CASADY, FOUNDER, GENERAL PARTNER AND CHAIRMAN OF THE ADVISORY BOARD, VESTIGO VENTURES: Yes, it’s a good question. I’m actually quite surprised by the prices that are being paid. I did twelve acquisitions when I was CEO of LPL. Those acquisitions were roughly 60 cents to 80 cents on the dollar of revenue. So, if the firm had a dollar of revenue, we paid 60 cents or 80 cents for it. These are transactions that are going for $1.50, $1.70, $2 for a dollar of revenue. So that seems high to me. So, if I were a buyer today, I would find it hard to transact at these levels.

Now, if I’m Goldman Sachs and I don’t have that business, maybe these prices are actually quite cheap, because I can immediately have an infrastructure and a group of advisors who are quite talented. They actually have a really wonderful technology that’s around the meaning of money and so they are going to a place that I think the industry is headed. So in their case, they’re spending perhaps more than I might spend, but doing so to really enter into a market they haven’t been into before, so it sounds very smart to me.

MRINALINI KRISHNA: Thank you so much for your time, Mark.

MARK CASADY: Thank you.