When it was founded in 2007, Chicago-based HighTower built its business by raiding the wirehouses of some of the biggest and best advisors in the business. But the firm’s latest acquisition of WealthTrust, a registered investment advisory firm with $6.4 billion in client assets, demonstrates the power and attractiveness of the independent model, as well as the evolution of HighTower's strategy.
HighTower announced intentions to buy the Houston-based RIA from middle-market private equity firm Lee Equity Partners through a $75 million expansion of its credit facility to $245 million. The acquisition is HighTower’s largest in its history and brings its total assets to nearly $46 billion, up from $20 billion in 2012.
"This is a transformational transaction for HighTower,” CEO Elliot Weissbluth said in a statement. “Ten years ago, we founded this company upon our core belief that the fiduciary approach is the best for clients — and the best for business. We are proof that the fiduciary standard is the future of financial services."
With this acquisition, RIAs will now account for about 40 percent of HighTower teams, including those that have been purchased as well as ones who simply use the firm’s platform of services. In the last 18 months, HighTower Executive Vice President Matthias Kuhlmey has facilitated six RIA acquisitions for the firm.
"The WealthTrust acquisition illustrates the strategic evolution of our business model,” he said in a statement.
The new credit facility, led by BMO Harris and lenders Regions Bank, Fifth Third Bank and KeyBank, will fuel future acquisitions, Chief Financial Officer Sagar Kurada said.
M&A activity in the RIA space reached a record high last year, and according to Schwab Advisor Services’ report, sellers prefer like-minded buyers when making a deal. That could be why strategic acquirers, such as HighTower, accounted for 29 percent of all 2016 deals.