Los Angeles-based Lido Advisors has become the third registered investment advisory firm to sell a minority stake to Constellation Wealth Capital, the private equity company created by former Emigrant Partners CEO Karl Heckenberg to invest in the growing channel.
With about $19 billion in assets across 130 advisors and more than 4,700 clients—approximately 80% of whom are ultra-high-net-worth, Lido was founded in 1999 and offers financial planning and investment management via a family office model, in addition to tax services provided through an affiliated CPA practice and trust and estate services through a third-party law firm.
The third rapidly growing firm to partner with Constellation since December, Lido has increased assets by about $7 billion since April. Constellation will work alongside Lido’s majority owner, Charlesbank Capital Partners, to support continued mergers and acquisitions activity and pursue strategic growth.
“I’ve been observing Lido for a long time and have been impressed by their operating model, value proposition, and leadership team,” said Heckenberg.
Launched last year, Constellation is on a mission to buy minority chunks of high-performing firms and provide them with the cash, resources and expertise needed to bring them to the next level of growth. All three of the firm’s inaugural investments—of which Lido is the largest—are with California-based firms.
On Tuesday, $6.5 billion AUM Perigon Wealth became the second Constellation partner in the Bay Area. Late last year, $2.6 billion AlphaCore Wealth Advisory became the first in La Jolla.
“I’m a big fan of Karl and the strategy,” said John Langston, founder and managing director of Republic Capital Group, an industry-focused investment bank that worked with Constellation on its first investment.
Langston believes Constellation is seeking to make longer-term investments in firms needing smaller chunks of cash, $50-$250 million or so, meeting an opportunity created by larger private equity companies with long-term or continuation vehicles who generally expect to write checks of $500 million or more.
“Unsurprisingly, they’re off to an excellent start,” he said. “Karl knows what he is doing and has the respect of our marketplace.”