HighTower Invests in $1 Billion RIA Lexington Wealth Administration

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HighTower Advisors, the RIA consolidator primarily based in Chicago, stated Tuesday that it has made an funding in Lexington, Mass.-based RIA Lexington Wealth Administration.

Phrases of the deal weren’t disclosed, however it’s according to HighTower’s technique of snapping up possession stakes in RIA’s. Lexington was suggested on the deal by Raymond James | Silver Lane Advisors and it’s anticipated to shut within the third quarter.

Lexington was based in 2000 by Michael Tucci and Kristine Porcaro and has 17 workers, together with 11 advisors. The apply plans to develop its shopper base, increase by way of acquisitions and scale the enterprise. It at present has $1 billion in property.

The deal follows HighTower’s strategic investments earlier this 12 months in LourdMurray and Inexperienced Sq. Wealth Administration, and, within the final two years, WealthTrust and Salient Non-public Shopper (now HighTower Texas), together with Salient Non-public Shopper’s belief group.

HighTower was based in 2007 as a touchdown place for wirehouse brokers, most of whom grew to become companions within the agency once they joined. However since non-public fairness agency Thomas H. Lee Companions acquired a “important” piece of the corporate in 2017, HighTower has been restructuring offers and buying RIA corporations.

In most cases, HighTower takes a variety of minority to majority possession of corporations in trade for a combine of money and fairness. Different firms, equivalent to Emigrant Companions, a brand new service supplier to unbiased registered funding advisory corporations, have comparable choices.

LWM selected to hitch HighTower after contemplating strategic partnerships with quite a lot of banks, non-public fairness and wealth administration corporations, executives on the agency stated. They stated they had been drawn to HighTower’s “entrepreneurial tradition,” its middle- and back-office operational infrastructure and its collaborative group, which numbers 99 advisory companies in 33 states and $70.three billion in AUM as of June 30.

Dave DeVoe, founding father of San Francisco-based consulting agency and funding financial institution DeVoe & Firm, stated in an interview with WealthManagement.com that “Hightower simply continues to display robust momentum. Their worth proposition is resonating within the market. Many advisors are searching for scale they usually have created a platform that may assist extra advisors run a greater enterprise.” Lexington is HighTower’s fifth transaction this 12 months, stated DeVoe, “which places them as one of many prime acquirers within the house.”

The billion-dollar market “is sizzling in right now’s setting,” DeVoe stated with seven such transactions this 12 months. Two of them have closed and 4 others are underneath dialogue. Whereas DeVoe didn’t work on this transaction, he added that “as probably the most energetic acquirers within the house, one would possibly assume we is perhaps engaged on one among extra transactions with HighTower.”

Dan Seivert, CEO of Manhattan Seashore, Calif.-based funding financial institution Echelon Companions, added that his agency “has stuff within the pipeline” with HighTower and he could be shocked if the corporate didn’t do extra offers later within the 12 months.

He stated HighTower’s shift in technique towards buying majority items of offers means the corporate has turn out to be a “extra related associate and potential purchaser” in RIA M&A.

Furthermore, he referred to as the deal “a feather in HighTower’s cap” as a result of Lexington “is a number one agency they usually definitely had their choices.”

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