Partner-owned Pathstone, which provides family office services, agreed to acquire Hall Capital Partners, an RIA managing about $45 billion in client assets. Pathstone said the transaction, announced Wednesday, will enhance its investment capabilities and boost its total assets under management (AUM) to almost $100 billion and total assets under advisement and administration to nearly $160 billion.
The merger “elevates Pathstone’s position as the largest” independent RIA focused on serving ultra-high net worth (UHNW) families, endowments, foundations and other similar institutions, the firm said in a news release.
Pathstone’s backers – Kelso & Company, Lovell Minnick Partners and management – are all investing additional capital to support the acquisition, Pathstone said.
The deal is expected to close late in the fourth quarter, according to Matt Fleissig, Pathstone’s CEO. Pathstone is acquiring 100% of Hall Capital. In exchange, Hall Capital’s existing shareholders and management team are contributing a significant amount of equity into the combined organization, he said.
After the acquisition closes, Pathstone will have expanded its national footprint and have a total of 23 offices and more than 750 team members, almost 300 of whom are shareholders of the firm, it said.
Hall Capital serves over 130 clients and has offices in San Francisco and New York. Pathstone has offices in Washington, D.C., the Philadelphia metro area and several states: Arizona, California, Colorado, Florida, Georgia, Massachusetts, New Jersey, New York, Rhode Island, Texas, Washington and Wyoming.
Like Pathstone, Hall Capital is an independent investment advisory business serving UHNW families, endowments and foundations. Hall Capital was founded in 1994.
“We have been a long-time admirer of Hall as one of the most respected, long-standing firms in our industry and we believe that combining the best of our respective organizations creates a truly unique value proposition,” Fleissig said. “We could not be more excited as we believe our combination represents a seminal moment for our firm, redefining the concept of scale in our industry and accessing a tremendous new group of team members and two sought-after locations – San Francisco and New York.”
Allen Darby, CEO of Alaris Acquisitions, shares his views on the transaction to WSR, explaining how transactions of this magnitude demonstrate that liquidity is available for the shareholders of some of the larger enterprises that have emerged in recent years.
“While still very small compared to the larger wirehouses, it shows there is plenty of room for entrepreneurial spirit to thrive without the added pressure of the private equity recapitalization cycle every five to seven years,” Darby said. “This not only paves the way for the next generation of firms aiming to replicate that success, but it also bodes well for shareholders of smaller firms with exceptional leadership and proven execution track records.”
Hall Capital Managing Partners Eric Alt, Sarah Stein and Simon Krinsky noted in a joint statement that Pathstone provides differentiated services that complement Hall Capital’s research and portfolio management capabilities.
“From the beginning, we have strived and prided ourselves on our ability to meet the needs of our clients, and we truly believe this combination brings together two complementary organizations who will benefit immensely from collaboration and sharing of resources,” said Katie Hall, Co-Founder and Co-Chair of Hall Capital.
UBS Securities served as the financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison served as legal counsel to Hall Capital. Ardea Partners served as the financial advisor and Alston & Bird served as legal counsel to Pathstone.
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jberman@wealthsolutionsreport.com.
