DeVoe & Co. played a significant role in the “strategic investment” that RIA HighTower said it made in San Francisco-based RIA Schultz Collins, which oversees $1 billion in assets under advisement.
“We introduced the two of those firms [because] we just really felt like they both shared a culture that would be a good fit,” David DeVoe, managing director of consulting firm and investment bank DeVoe & Co., told ThinkAdvisor on Tuesday. HighTower and Schultz Collins also “look at the opportunities in the marketplace similarly,” he said.
With assets under management of $59.5 billion and assets under administration of $71.3 billion as of Sept. 30, HighTower’s capabilities will “enable the Schultz Collins team to focus on more of what they love doing, which is serving clients,” he noted. After all, the investment allows Schultz Collins to “partner with a $70 billion-plus organization and capitalize on the benefits of that scale,” including HighTower’s operational and technological capabilities, he said.
Specifically, HighTower’s “business consulting, capital, and middle- and back-office support will enable Schultz Collins to expand its wealth management services for new and existing clients,” according to DeVoe & Co.
HighTower, meanwhile, is “extending its presence in the San Francisco and Silicon Valley areas” via the investment, Bob Oros, its CEO, told ThinkAdvisor. But the main benefits for HighTower are that it gets to leverage the “great leadership team” at Schultz Collins that’s “running a strong business with a solid client base,” he said.
HighTower didn’t specify the exact terms of the investment. “While we do not disclose terms of our transactions, what we can say is that HighTower has taken a significant equity stake in Schultz Collins with a blend of cash and equity,” Oros said.
The transaction is expected to close in the fourth quarter of 2019, subject to regulatory approvals and other customary closing conditions, according to HighTower.
Schultz Collins also has offices in San Francisco; Washington, D.C.; and Towson, Maryland, serving individuals and families, institutional investors and retirement plan sponsors, HighTower said. Schultz Collins was founded in 1995 by Dale W. Schultz, Patrick J. Collins and Kristor J. Lawson. Seven of its 11 employees are advisors, according to HighTower.
“In getting to know Schultz Collins, we valued how they had grown the business with a deep commitment to clients,” according to Oros. “We quickly saw that we could help them scale while maintaining the steadfast client focus that had been an important factor in their success to date,” he said in a statement. HighTower will be able to help Schultz Collins “scale their business in Silicon Valley, the West Coast and across the U.S.,” he added.
Schultz Collins represents HighTower’s 25th external RIA transaction since inception and its fourth in 2019, following deals with Memphis-based Green Square Wealth Management ($2.6 billion in assets) in February, Beverly Hills-based LourdMurray ($4.8 billion) in April and Boston-area Lexington Wealth Management ($1 billion) in August. Including the Schultz Collins transaction, HighTower now has 107 advisory businesses in 34 states, it said.
The HighTower transactions have been part of a larger M&A trend that DeVoe & Co. has seen among RIAs with $1 billion or more this year, DeVoe told ThinkAdvisor, noting such M&As are up so far this year from 2018. Through the first three quarters of 2019, there were 29 transactions in the category, up from 20 in the first three quarters of 2018, he pointed out. “It’s an active year for the $1 billion-plus advisors, but frankly it’s active across the board,” he said.
The momentum behind RIA mergers and acquisitions accelerated further in the third quarter this year after a strong first half of 2019, achieving the biggest quarter the industry has ever seen and keeping the sector squarely on track for yet another record year, the most recent Nuveen/DeVoe RIA Deal Book showed. After 33 transactions in the second quarter, there were a total of 36 transactions during Q3, up from 22 in Q3 a year ago and higher than the 12-month trailing average of 33.
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