In the RIA world, succession planning is a well-trodden road by now, with bigger organizations acquiring smaller ones, strategic rollup firms, and RIAs assuming debt or seeking capital from private equity firms that look to direct day-to-day business. We know these alternatives well because we’ve explored them all. Recently, we decided on a different route, and here’s why we think it works.
First, some background. Bingham, Osborn & Scarborough is a wealth manager based in San Francisco. As of Feb. 28, we managed about $4.6 billion in assets. Between 2004 and 2008, we sold a majority interest in the firm to Boston Private Financial Holdings. This made sense at the time and helped our original founders exit in a sound way while facilitating a succession plan for future leaders of the firm.
We had a positive and honorable relationship with Boston Private, but ultimately wanted to instill a more entrepreneurial mindset in the firm by controlling our own destiny and by participating more fully in the financial rewards.
Fast forward to last year, when we decided to go private with a minority investment from Kudu Investment Management. Our principals and founders now own nearly 70% of the firm, with Kudu offering permanent capital for a smaller stake.
Getting to this place was not easy. It required careful negotiations with our former backer as well as thoughtful discussions with our partners regarding the firm’s long-term future and the structure that would enable us to meet our most meaningful client, business, and personal goals.