Bronfman E.L. Rothschild is bulking up, making its third acquisition in less than two years.

The firm just bought TriCapital Advisors, an RIA based in based in Rockville, Maryland, with approximately $185 million in AUM. The purchase brings Bronfman up to about $4.4 billion in assets.

Bronfman signaled its intention to become a major player in the RIA M&A space when it bought Highline Wealth Management in August 2015. Highline had $1.4 billion in assets and was helmed by Neal Simon, an experienced and highly visible RIA executive who had grown Highline organically and through a series of acquisitions.

Named Bronfman's CEO after the acquisition, Simon, now backed by ample capital from Bronfman, private investors and access to debt and equity markets, has been charged with expanding Bronfman's footprint on the East Coast and in the Midwest.

Bronfman CEO Neal Simon wants to acquire real wealth managers, "not product guys."

BRONFMAN'S SALES CRITERIA
In addition to geographic location, Simon says he's looking for independent wealth management firms, "as opposed to product guys," who have an average client size close to Bronfman's — around $3.5 million in investable assets per client.
Simon, also based in Rockville, says he has been familiar with TriCapital and the firm's president Mark Schwartz for about six years. Schwartz was looking for a succession plan and TriCapital's 401(k) business was a good fit for Bronfman, Simon says.

The deal was done mostly in cash with some equity, with a valuation based on a multiple of EBITDA, according to Simon. Because the transaction was relatively small, Bronfman funded it out of cash flow and its line of credit, Simon says.

'TWO TYPES OF DEALS'
Asked to comment on the recent Fidelity report concluding that major RIA buyers were becoming more selective in their purchases, Simon drew a distinction between aggregators and RIAs.


"I think there are two types of deals," Simon says. "Financial deals done by aggregators who are buying preferred cash flow are not discerning. RIAs like Bronfman or Savant or Aspiriant who want to truly merge companies into one business, with one philosophy and one brand, are very discerning when it comes to finding companies with the right fit."

TriCapital's Schwartz will become a managing director at Bronfman. TriCapital Vice President of Operations Jan Campbell will also join Bronfman, along with Rebecca Ward Maranville, the firm's client service manager.

Charles Paikert

Charles Paikert

Charles Paikert is a senior editor with Financial Planning, a SourceMedia publication.