December 6, 2023

Multi-family office Pathstone will advise on more than $100 billion in client assets in its biggest deal of the year to acquire a firm that manages about $75 million per client family.

Englewood, NJ-based Pathstone — No. 4 Firm in Financial Planning’s Latest Annual Rankings Largest Fee Registered Investment Advisory Firm In the country – is acquiring Veritable, a multi-family office in suburban Philadelphia whose website status The firm manages more than $17 billion in assets from 200 client relationships.Both parties did not disclose all terms of the deal Their July 17th announcement, but they are expected to close by the end of the third quarter. Pathstone to pay $294 million to subsidiary of asset management giant Affiliate Managers Group Buy out some of its shares In worthy of the name.

Peter Nesvold, partner at RIA M&A investment banking firm, said Pathstone’s milestone after the deal “really highlights just how big the market opportunity is in the ultra-high-net-worth wealth space.” Republic Capital Group. Growth of Pathstone and others Multi-family offices such as Cresset and Alti Tiedman Global That mirrors the wealth management space, where the number of client assets that define the term “size” is growing, Neswold said in an interview.

“To be a true multi-family office, you have to be able to offer a broad range of products, you really need to operate at scale,” he said, noting that larger deals would include firms with about $3 billion to $7 billion in client assets . Larger RIAs. “If clients are looking for a full suite of family office services, they will find it more difficult to compete.”

although M&A volume down In the second quarter of the industry, The average size of companies changing hands is rising Wealth management acquisitions show resilience amid ongoing inflation and fears of a potential recession, experts say.

The deals announced last week provide the latest example of a major investment. Hybrid RIA Integrator Prime Capital Investment Advisors Access to minority growth investments From private equity firm Abry Partners and major LPL financial affiliate The Wealth Consulting Group Acquired a company called V Wealth This brings its client assets to over $7 billion. Captrust, another RIA integrator, Acquiring an Ultra High Net Worth Company Southern Wealth Management, which has $2.3 billion in client assets, is its fifth deal of 2023.

Newton Square, Pa.-based Veritable was founded in 1986 as Stolper & Co. before changing its name to Hawthorn in 1997 as a subsidiary of PNC Bank, according to the company’s Form ADV brochure. SEC. In 2004, the firm’s partners bought out a stake in PNC, and the company was renamed to its current name.

Eight years later, became a subsidiary of asset management company Affiliated Managers acquisition of equity The size of Veritable was not disclosed, and the company’s senior leadership retained a residual interest in the company. Today, Veritable has at least 87 employees, 28 of whom are registered as investment adviser representatives with state regulators, the ADV form said.

Michael Stolper, founder of Veritable, will become co-chairman of Pathstone, “We are culturally and philosophically aligned with Pathstone, and this combination will allow us to further our mission to deliver on what we do to our customers. Generational commitment,” he said in a statement as part of the deal. “While we’re proud of what we’ve built for Veritable, we look forward to the next chapter of continued growth, collaboration, and truly differentiated solutions in the standalone RIA space.”

Affiliated Management Company, a public company Manager with $668 billion in assets under managementThe company said it will use the aggregate cash proceeds from the transaction to repurchase stock, pay down debt and invest in future growth initiatives.RIAs had about $10 billion in AUM at the time the asset manager invested in Veritable Announcement until 2012.

“We are excited to form a strong partnership with Veritable to expand its growth and success over time,” Affiliated Managers CEO Jay Horgen said in a statement. Partners and AMG Recognizing the strategic benefits of merging with Pathstone, and given our alliance and approach to collaboration, we support all stakeholders, including Veritable’s customers, partners and employees, as well as AMG, in making this a successful outcome. ”

Pathstone has closed at least two other deals to acquire companies this year Have at least $1 billion in client assets after the merger of trust companies Sales hit $35 billion in December.Private equity firm Kelso & Company invests an undisclosed amount in Pathstone Deals announced in March, joining existing equity holders Lovell Minnick Partners.RIA, a division of New York Life Insurance, also provided term loan financing to Pathstone See its ADV form handbook.

Pathsone CEO Matthew Fleissig said in a statement: “Veritable has changed everything about the ultra-high net worth advisory business – they have a rich history in creating what we know today as multi-family offices. , and they understand what it means to provide differentiated advice to ultra-high-net-worth families.” “Together, we will leverage the combined knowledge and skills of our organization to deliver a new level of service to our clients, creating a firm of unmatched scale in our industry company of.”