© 2019 SourceMedia. All rights reserved.

$6 Billion RIA Hits M&A Jackpot

Another top RIA has hit the M&A jackpot.

This time it's Constellation Wealth Advisors, an eight year old, $6.1 billion wealth management firm based in New York City and Menlo Park, California, which agreed to be sold to First Republic Investment Management, a wholly-owned subsidiary of First Republic Bank, for $115 million.

Constellation co-CEOs Paul Tramontano and Jon Goldstein and four other partners have signed long-term employment contracts as part of the transaction.

The deal follows several other RIA blockbusters over the past year, most notably AMG Wealth Advisors purchasing a majority stake in Baker Street Advisors, a $5.2 billion San Francisco-based investment advisory firm and Boston Private's $60 million deal for Banyan Partners, a $4.3 million Florida-based wealth manager.


The Constellation deal underscores the importance of banks continuing to be major players in RIA mergers and acquisitions, says Liz Nesvold, managing partner for New York-based investment banking firm Silver Lane, which advised Constellation.

"The independent advisory market is a very, very important space for banks to expand their trust [business] and investment management fee," Nesvold says. "Acquiring a quality RIA also allows banks to expand their geographic footprint and clientele and attach a better multiple to their stock price."

Earlier this month Silver Lane advised Halsey Associates, an $850 million RIA which signed an agreement to be bought by Washington Trust Bancorp for an undisclosed sum.


First Republic drew attention in the RIA universe in December 2012, when it bought Luminous Capital, a prototype breakaway broker firm based in Los Angels and Silicon Valley for the premium price of $125 million in cash.

Analogies between Luminous and Constellation are not misplaced, according to Nesvold.

Constellation's size, structure and geographical reach commanded a "scarcity value premium," Nesvold says.

The Constellation deal also demonstrates that high quality wealth management firms remain in high demand, she asserts – with a caveat.

"You have to peel back the layers of the value onion," Nesvold explains. "The firm has to be in an attractive market where wealth is being aggregated, it has to be growing faster than the peer average and it has to be growing profitably.

"We see firms that aren't growing, are not reinvesting in talent and not profitable who want a Luminous price. I'm sorry, but not all wealth management firms are created equal."

Read more:

For reprint and licensing requests for this article, click here.