Slate Hill Partners, a Dallas-based single-family-office-backed holding company, has taken a minority stake in local registered investment advisor XO Wealth Management.
Founded in 2016 by Managing Director Matt Fuller, XO has $630 million in assets under management and is among the fastest-growing RIAs in Texas. XO provides customized financial planning and investment management for entrepreneurs, corporate executives and other wealthy individuals.
According to Fuller, the partnership is motivated by the changing needs of his clients, including increased interest in the private equity space and a desire for more family office services. Several current clients who own businesses are on the cusp of selling and will have liquid assets to manage.
“This is really going to be able to help us take that next step in terms of family office capabilities,” he said. “And, we've already had excellent deal flow in the private equity space that just got a whole lot better from our partnership with Slate Hill.”
It is Slate Hill’s first investment in the wealth management sector since its 2020 launch, but it may serve as a prelude to further deals in the coming months and years, according to Managing Partner Joe Valdman. The firm has spent two years investing in niche asset managers, building out a handful of exchange traded funds and launching an end-to-end turnkey ETF platform. Now, Valdman believes Slate Hill will be positioned to offer opportunities for middle-market wealth management firms, like XO, looking for family office capabilities, access to private investments and growth capital.
He also sees the evolving wealth management space as an attractive investment opportunity for his growing firm and the unnamed family behind it.
“We like this space a lot,” he said. “This was our first foray and we’re thankful that Matt and his team wanted to partner with us.”
Slate Hill plans to target local advisors too small to be on the radar of large aggregators and provide them with a platform for growth. Ideally, said Valdman, all acquired firms would be rolled up under the XO brand, but that’s not a stipulation. Acquisitions will be tailored to each firm, and all models are ostensibly on the table.
“We don't have one buy box,” he said. “We don't have one model; we'll customize it to what advisors and advisory practices want.”
There will also be a focus on Texas-based firms, but there could be exceptions. “That doesn't preclude us from pursuing or considering opportunities outside of this state, but I think we'd like to have a geographical footprint,” Valdman said.
For his part, Fuller sees an opportunity to grow XO into a multi-billion-dollar firm over the next five years but said it’s important to maintain agility and an “entrepreneurial tilt.”
“I think that the industry's making a mistake,” he said. “It seems to me that a lot of these larger aggregators are turning the model back toward wirehouses and I don't think that that's the right way to go. We can maintain some entrepreneurial capabilities and the ability to move quickly and take advantage of opportunities, whether they're public markets or private markets, and I think that that's going to serve us and our clients and future advisors that want to join us to come into that type of an environment.”