Consulting firm Mercer will acquire Pavilion Financial Corp. and most of Summit Strategies Group to better access non-profit institutions.
Pavilion, a fellow consultant and wealth management company, has $685 billion in assets under advisement. The Winnipeg, Manitoba-based firm specializes in alternatives. Summit, also a consultant, has $160 billion in assets under advisement.
Mercer intends to utilize Pavilion’s expertise to expand its presence in non-profit institutions. Pavilion’s clients will be able to use Mercer’s resources. These include providing chief investment officers, based outside the client company, and research tools. Mercer will take over almost all of Summit’s operations, except its public defined benefit plan consulting. AndCo Consulting will buy the DB unit.
Rich Nuzum, president of Mercer’s global wealth business, said Pavilion and Summit’s talent is what drew Mercer to nab these firms. “We know Pavilion and Summit well. We compete with each other, we share clients, and get to see each other in action in the boardroom,” he told CIO.
Nuzum said the second biggest attraction to the two consultants is their alternatives research capabilities. “Clients are demanding more from their advisers, and it’s a real challenge to cover all the niche and opportunity … even with our size,” he said.
Nuzum says that, with the acquisitions, Mercer will double its footprint in the alternatives research and advice space.
In a release, Nuzum called Pavilion “a leading specialist” in the US’s defined contribution, endowment and foundation, healthcare, and insurance sectors. He also said that Pavilion “has a strong presence” in Canada’s private wealth management.
Mercer is also looking to bulk up its business in the non-profit sectors, particularly in endowments and foundations, another key element in the merger.
“If there’s a new innovation in the industry, we’ll have the manpower to get under that and have a better house view. We’ll be able to recover more ideas more deeply together than we would have done alone, so as a result, our speed should go up for endowments and foundations,” Nuzum said.
Non-profit sectors have also been growing faster in recent years, making them more attractive for expansion, said Nuzum.
He also gets a sense of purpose when advising non-profit-based investment decisions.
“There’s people who want to give money to non-profit organizations to try to help the world, and when we get to work with those clients, we have to focus on the investment results, but we get to help them achieve their mission,” Nuzum said. “It’s extremely rewarding work. You don’t have a hard time explaining to your kids what you do for a living or looking at yourself in the mirror every morning when you’re helping non-profit institutions choose their investments.”
Daniel Friedman, Pavilion’s president and CEO, reflected on the firm’s expansion into “one of the industry’s top consulting teams, with deep expertise in specialized areas such as alternatives, not-for-profit healthcare, and retirement benefit consulting.” In regards to the Mercer deal, his sentiments echoed Nuzum’s optimism.
Nuzum also complimented Summit’s prowess in the non-profit space. He said the business provides “notable alternatives capabilities to hospitals and foundations.”
Pavilion will keep its name in its US non-profit and insurance business. Mercer will rebrand the agency’s alternatives, defined benefit, defined contribution, and wealth management businesses.
Pavilion and Summit’s executives will remain at Mercer with new titles, minus Friedman and Jon Kliewer, chief financial officer of Pavilion Financial Corporation, the parent company. Both will retire before the deal closes, Friedman confirmed.
Both deals are expected to close in the fourth quarter.