Coastline turns to private credit for its next dozen deals

Coastline Wealth Management has funded its next dozen acquisitions with a $100 million senior secured credit facility from Brightwood Capital Advisors, the private credit firm that lends to middle-market companies, WealthManagement.com first reported. The New York-based Kestra Financial affiliate closed the facility alongside 12 deals that pushed it past $6 billion in assets under management and administration.

The firm that now services more than 10,000 clients across more than 30 acquisitions began in 2012 with Garrett and Cindy Taylor and about $20 million in assets. Garrett Taylor, Coastline's CEO, called the $6 billion mark "a reflection of the quality of the advisors and teams who continue to choose to build their future with us."

Brightwood's Chris Warren, managing director and co-head of capital markets, described the lender's logic in the language of the roll-up trade: Coastline has "a strong platform, a respected brand and an approach designed to meet the needs of wealth professionals at a range of pivotal points in their respective careers." That sentence describes a firm that buys advisors at the moments they are most likely to sell.

The $100 million facility amounts to roughly 1.7 percent of the firm's $6 billion book, or $10,000 for each of its 10,000 clients. It is a modest debt line against a large, sticky asset base, the kind of arithmetic that makes private credit comfortable lending the money.

A senior secured credit facility is debt, and debt changes the arithmetic of an acquisition firm. It avoids the dilution that would come with selling equity, so the founding team keeps the full upside of the deals it closes, while the lender moves ahead of the owners in the capital structure. The roll-up has to service the facility from cash flow, not just report a bigger asset number, because Brightwood is senior and secured: the advisory book is the collateral.

The facility's interest rate and covenants are undisclosed, so the leverage is unquantified, but a credit facility rewards momentum and punishes pauses. When the deal pipeline slows, the lender still gets paid, and the interest bill becomes a fixed cost against whatever the acquired books generate. The dozen completed acquisitions show the model works today; the facility shows it is now designed to keep buying.

Coastline operates as a Kestra affiliate rather than a branch office, and it borrowed in its own name, which suggests the debt sits on Coastline's books rather than Kestra's. That separation lets a parent host a growing platform without consolidating its leverage, and it means the firm is running an independent M&A program with a lender's money.

The deal was announced two days after Kestra ended a year-plus search for a head of wealth management by hiring BlackRock's Kelly Apple, and PWD's records show three other C-suite hires in the same week. Kestra, an Austin broker-dealer and RIA, is growing from two directions at once: hiring executives to manage distribution and recruiting, and watching an affiliate finance its own acquisitions.

The broader wealth M&A market is running ahead of completed deals and disclosed client assets, with a 2.7-to-1 gap between announced intent and closings. Coastline's dozen are real closings, and the $6 billion book is real scale, but the facility shows how the aggregator machine is being financed while it runs. The cheap deals will not last forever.

Borrowing to buy is the right trade only while the cost of capital stays below the return the acquisitions can generate, and the evidence is not yet in. The founders are betting that private credit can carry them past the next valuation reset, and that is exactly the point where the aggregator model will be tested. A lender senior in the capital structure does not need the roll-up thesis to work forever; it needs the collateral to hold. The collateral is a book of advisory clients, and client retention is the covenant no term sheet can enforce.