December 2, 2023

One of the largest fee-only registered investment advisory firms will have more than $80 billion in assets after its latest $1 billion deal.

Private equity-backed Pathstone agreed to acquire Austin, Texas-based Brainard Capital Management, an RIA for ultra-high-net-worth clients, primarily technology entrepreneurs, with total client assets of approximately $2 billion, The company said on May 1. The transaction marks Pathstone’s second this year For a company with at least $1 billion in client assets, and it follows a new investment Undisclosed size of entry into Pathstone in March Led by private equity firm Kelso & Co. As a firm with offices in 17 cities, 180 shareholders and 350 employees, Pathstone is fourth largest company financial planof RIA leaders last year’s ranking.

“The strategic plan is to try to become a family office or a national brand for ultra-high-net-worth clients,” Pathstone CEO Matt Fleissig said in an interview.

Announcements from other firms last week underscore how billions of dollars in RIAs are changing hands as private equity-backed consolidators such as Pathstone and its rivals snap up big consulting businesses.

April 25, A newly formed company called Modern Wealth Management said it had acquired the assets of Barber Financial Group, $1.5 billion in client assets. The next day, Wealth Enhancement Group announced that it had Acquired New Era Financial Advisors, with six advisors and $1.1 billion. The latter deal is also Wealth Enhancement’s second billion-dollar deal in 2023.

Ask for scale
despite some indications Total transaction volume is declining This year, most experts expect M&A deals to continue growing at a brisk pace for the foreseeable future amid fears of a recession.

The addressable market for RIA acquisitions is equivalent to firms with $3.7 trillion in client assets, of which about $2.6 trillion is related to advisors who are retiring, $588 billion from “growth-challenged” consulting businesses seeking scale, and $506 billion from moving to independence Channel, Stephen Caruso, research analyst for the wealth management division of consulting firm Cerulli Associates, noted In last week’s webinar.

“Between the growth of the past decade and the private capital available to drive that growth, we’re going to see that continue over the next decade,” Caruso said. “Over time, we’ll see Until capital continues to invest, and, in fact, the arrival of capital is a market opportunity.”

Pathstone’s newest RIA has 10 staff led by founder Owen Brainard and managing director Clark Davis. Brainard’s RIA lists $853.8 million in assets under management for its client base, which includes 93 high-net-worth individuals. to its latest SEC Form ADV. According to Fleissig, the remainder of the firm’s $2 billion in client assets comes from accounts it advises, which are held outside the firm.investment bank Republic Capital Group as Advisor Brainard is looking for a buyer.

“Having gotten to know the Pathstone team, we are very excited to join forces with a team that we share culturally and philosophically,” Brainard said in a statement. “We believe that combining the resources and skills of our organization will enhance Our ability to serve clients at all stages of their wealth planning.”

Kelso’s investment in Pathstone Four years after an earlier influx From Lovell Minnick Partners. Pathstone is also said to have term loan financing from RIA Madison Capital Funding, a unit of New York Life Insurance Company. Its Form ADV Handbook. Pastone, December Acquisition of trust company Willow Streetwith $35 billion in assets under management.