RIA Referral Dispute Sheds Light on Value of Deal Data
A promising deal between business partners in the registered investment advisor M&A space started where many promising deals do: At a casual meeting inside a country club, this one in Mission Viejo, Calif.
During that meeting on Nov. 16, 2023, a young business developer, Julien Baneux, showed Jim DiPisa, an M&A consultant and banker, a tool the two had previously discussed to research and analyze RIA data for buyers and investors. DiPisa, who had founded his M&A consultancy Dalphia Partners earlier that year, was interested in the platform, potentially as a Dalphia affiliate, according to court records that would be filed later.
After subsequent communications, DiPisa ended up with a minority stake and a board seat in the Dallas, Texas-based startup called RIA Growth Catalyst.
Nearly two years and multiple lawsuits later, those initial meetings have led to a legal battle that underscores the value of data-driven insights in the red-hot deal market for RIAs. At the core of the dispute is the relatively minor sum of $200,000 for a referral fee—peanuts in the multi-billion-dollar RIA deal space. But it also involves the quest to lay claim to, and protect, data and proprietary business analysis, and the scramble to match RIA sellers with often private equity-backed acquirers.
“Data on RIAs is clearly valuable,” said Andrew Besheer, managing principal of Besheer & Associates, who is not involved in the dispute. “It’s also relatively easily accessible—anyone can download ADV filings from the SEC. … The RIA Catalyst folks are clearly adding their own secret sauce in terms of data analysis and output. I suspect that the initial bar to recreating what they do is probably relatively high, resulting in their output data being quite valuable to parties focused on RIA M&A.”
Baneux, a former business development director and consultant for wealth manager Certuity, developed the platform from publicly available data and added proprietary overlays to measure things such as RIA growth rates and acquisition desirability. The firm publishes data sets on LinkedIn to highlight its capabilities, such as a recent post unpacking a deal Savant Wealth made for an RIA that scored an 82 out of 100 on the platform’s acquisition score (considered a high score reflecting a solid match between buyer and seller).
In later court filings, Baneux details how he came up with the idea for the platform and how much time he spent developing it. That included seeking advice from, and putting “trust” in, industry participants such as banker DiPisa to help with the venture.
DiPisa disputes that history in separate filings, claiming the software was developed based on his ideas on the RIA market, and was initially to be developed as a Dalphia Partners’ product. Baneux, he argues, created his firm without looping DiPisa in, only to later strong-arm him and clients for referral fees.
Both agree, via the court filings, that Baneux initially helped DiPisa identify an RIA that would ultimately be sold to mega-RIA Mariner in a deal brokered by Dalphia. From there, agreements on the terms of what Baneux should receive for that referral and others, as well as the legality of DiPisa’s use of RIA Growth Catalyst, are now with district courts in New York and Texas.
Citywire first reported on the court filings.
Big Deal
According to lawsuits filed by DiPisa in New York and Texas district courts, Baneux helped set up a conversation between Rochester, N.Y.-based RIA Forté Capital and a national wealth manager—later identified as Mariner. (The deal was just one of dozens announced weekly in the RIA sector, meriting a brief mention in a larger Mariner deal story on WealthManagement.com in August. Mariner is not involved in the legal dispute.)
According to DiPisa, however, “meaningful engagement” over the deal didn’t happen until a later meeting he had at an industry conference.
“Baneux played no role in any of these efforts and provided no material contribution to the execution or delivery of the advisory engagement,” a complaint filed in New York states.
Even so, according to the complaint, as the deal took shape in early June, DiPisa proposed paying Baneux a fee capped at $200,000, or “the lesser of 20%” of the final deal terms. Later that month, Baneux responded, allegedly calling for an uncapped fee—the potential for a higher payout depending on the final deal—and a similar arrangement for other referrals.
After DiPisa rejected that setup and reiterated the capped referral fee, the lawsuit claims Baneux contacted acquirer Mariner about the fee terms.
“Baneux has attempted to pressure Dalphia by implying that the transaction will be jeopardized unless Dalphia pays an unsubstantiated, uncapped and entirely undocumented twenty percent (20%) fee,” the complaint states.
In the July 4 complaint filed in New York, DiPisa calls on the court to negate any finder’s fee and to keep Baneux and the firm out of the transaction. He is represented by his brother, Joseph DiPisa, in that case, who co-founded the law firm Yook DiPisa.
In a related temporary restraining order filed in the district court of Texas on July 23 by Dallas law firm Parsons Mcentire Mccleary, DiPisa alleges that Baneux, through his attorney, sent current and potential Dalphia clients “Litigation Hold Letters” regarding the referral fee dispute. DiPisa is seeking damages of $250,000 for the allegedly “disparaging” communications.
Adding to the litany of grievances, DiPisa’s Texas complaint also details alleged misuse of company funds by Baneux, including personal moving costs and expenses for the attorney defending him against the charges. The lawsuit claims Baneux’s actions have brought RIA Growth Catalyst and BNX Capital, Baneux’s LLC, “into insolvency and placed it in peril relating to the substantial need of bankruptcy protection.”
No Deal
Baneux responded to DiPisa’s suit with a 275-page rebuttal in a U.S. district court in Dallas on Sept. 2. The rebuttal refuted DiPisa’s allegations and brought countercharges against DiPisa and Dalphia, alleging multiple cases of fraud and theft related to his business.
According to the filings, Baneux developed the platform on his own time and with his personal resources. He saw the tool as applicable not just for the wealth management sector but to “provide value … in support of private equity investments and mergers and acquisitions.”
Like many entrepreneurs, Baneux sought advice on his business idea from industry contacts. That is when he was introduced to DiPisa. The lawsuit notes that the two discussed a business case for Dalphia to use what would later become RIA Growth Catalyst, in which Baneux would get a 35% success fee from any transactions.
According to the counter-suit, that fee was later reduced to 25%. While that was never solidified, the deal with Dalphia included an open, ongoing referral system for deals that relied on Baneux’s work.
Baneux later set up the Mariner deal for DiPisa. However, according to his claim, he was not paid the appropriate referral fee based on their prior conversations. The entrepreneur alleges DiPisa filed the initial legal challenges in New York to force Baneux into complicity.
“Dalphia began asserting alleged misconduct by BNX and Mr. Baneux in relation to RIA [Growth Catalyst],” the lawsuit states.
Meanwhile, the lawsuit argues that DiPisa was using RIA Growth Catalyst’s data to drum up business in ways that breached its terms and conditions.
“RIA Platform customers are prohibited from using RIA Platform information in support of business transactions outside their firms, such as CIMs (Confidential Information Memorandums) presented to potential purchasers in mergers and acquisitions,” the claim states.
Baneux also claims Dalphia used his site knowledge to attempt to create a separate version, though the complaint does not go into specific detail.
“Upon information and belief, Dalphia or Mr. DiPisa has engaged in similar or competing business enterprise since being allowed to join RIA as a member,” the lawsuit states.
More broadly, the documents filed by his lawyer paint the picture of a young business owner seeking to make his way in an emerging market, only to be bitten by a savvier player. In addition to DiPisa, investors in RIA Growth Catalyst include his father, Phillippe Baneux.
“BNX, helmed by a newly minted business owner with little experience negotiating operating agreements, believed that Dalphia and Mr. DiPisa were acting in good faith toward BNX and toward RIA,” the complaint states. “Having no reason to suspect that Dalphia’s true purpose was to acquire control over the RIA Platform and RIA’s business enterprise, BNX relied upon Mr. DiPisa’s experience.”
Baneux is seeking damages from DiPisa, ranging from payment for using RIA Growth Catalyst’s data to the expenses Baneux and RIA Growth Catalyst have had to pay to deal with the multi-state litigation.
Client Fallout
Brandon Kawal, a partner with Advisor Growth Strategies who is not linked to either party and not involved in the dispute, said the dustup shows the promise and perils of a maturing RIA deal space.
“On the positive side, you have more advances in technology—AI, databases and the like that are out there, and there are more tools available,” he said. “But it also presents new areas to navigate, because we have the same obligations to ultimately protect the client.”
Kawal said the dispute, which shouldn’t affect the RIA firms involved, underscores the need for complete transparency in dealmaking among all the parties on both sides.
“For sellers, knowing what fees you are paying and to whom and what the arrangements are is pretty key,” he said. “This is most likely the most transformational transaction of your life, and you don’t want to end up going through a PR or media battle.”
RIA Growth Catalyst remains active in the RIA space, pitching its value in researching and identifying acquisition-worthy RIAs. Baneux, who was on his way to an industry conference this week, said the firm would “continue to operate and grow despite the situation.”
“We hope it gets resolved,” he said. “But we didn’t file the lawsuits—Jim did. They were not just a surprise to us, but we made efforts to meet with and resolve the situation beforehand, and he cancelled the meetings and refused to join.”
DiPisa’s Dalphia has not announced a deal since the Mariner transaction. Still, his relatively new firm shows a history of transactions with large players such as EP Wealth and Cary Street Partners. Before starting his firm, DiPisa had been head of business development at Robertson Stephens, a senior vice president at Dynasty Financial Partners, and an equities trader and analyst at Goldman Sachs, among other roles.
DiPisa’s attorneys confirmed that they are working in the Texas courts to get some or all of Baneux’s allegations dismissed.
They declined to comment on the legal proceedings beyond the court filings.
A meeting is set for Oct. 13 in a district court in Dallas to set a schedule in the ongoing case.
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