Hightower Takes Stake in $1.4 Billion-AUM Ohio Advisory Firm
Hightower Advisors’ new strategy of growth through acquisition of small advisory firms is likely to be slowed by the coronavirus economy, but the Chicago-based firm on Tuesday announced an investment in a Cincinnati-based RIA with $1.4 billion in client assets.
The deal is the sixth investment since Hightower was recapitalized by private equity firm Thomas H. Lee Partners in 2017, and reflects a shift from the firm’s founding strategy of recruiting wirehouse brokers to operate under its advisory umbrella.
“It fits very nicely both short- and long-term with where we have pivoted,” Chief Executive Robert Oros said of Osborn Williams. “We are spending no time trying to lift teams out of full-service firms and are spending all our time talking to existing RIAs who know how to manage a business and have a proven track record.”
The strategy is much easier to execute than the concept that was devised at Hightower’s founding in 2008, he said. Oros succeeded Hightower founder Elliot Weissbluth as CEO in January 2019.
Oros declined to comment on the terms of the new investment, other than to say that it replicates previous ones in being comprised of cash and equity. Hightower competed with around ten other potential investors, he said.
Due diligence was well underway before the effects of the coronavirus pandemic became evident in the U.S., he said. While many analysts expect acquisitions to be at least temporarily slowed along with most economic activity, Oros expects opportunity to emerge from the crisis.
Many advisory firms will be strained by the collapse of customer confidence and market volatility, he said, and Hightower expects that its compliance, back office and transition capital assistance resources will be in demand.
“It makes me want to double down on our strategy,” Oros said. “You’ll see us more aggressively lean in here when the time is right and the health crisis has been managed.”
Hightower now has 107 practices with 219 advisors. As of December 31, before this year’s acquisitions, they managed $57.4 billion of customer assets.
Last month, the firm invested in Wellspring Associates, an Atlanta-based firm specializing in estate and tax planning for families with at least $50 million.