Tom Naratil says private equity firms can play a distinct hand in helping wealth management firms along the way to going public through an IPO.
That's part of the role the former co-president of UBS's global wealth management sees himself taking on in his new position at the New York-based private equity firm Lightyear Capital. Lightyear, which had $4.1 billion in assets under management at the end of last year, announced Monday that it is bringing Naratil on as an operating partner.
Naratil said he hopes to help Lightyear Capital build on its lengthy history of investing in wealth management and financial services firms.
"There are a lot of companies that are at that stage of growth where an IPO might be the next step but not the current step," he said. "This is the time when a private equity company can help these firms really get in shape for that next step."
Lightyear Capital, founded in the early 2000s, has current holdings in Allworth Financial, Cerity Partners and Wren Sterling. Its previous investments include
Experts have often pointed out the possibility that the private equity backers of Osaic and Cetera will take those firms public. Even so, initial public offerings — in which companies sell shares on public exchanges for the first time — have remained fairly rare in the wealth management industry.
LPL Financial, the largest U.S. broker-dealer,
Meanwhile, private equity has played an outsized role in recent firm buyouts in the wealth management business. The investment bank and consulting company
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Tim Welsh, the president of the wealth management consultant Nexus Strategy, said private equity investors love advisory firms because of their ability to generate cash and their place in a growing industry. Private equity, in turn, frees up advisory executives to worry less about their finances and more about how to run their businesses, Welsh said.
"It takes some of the risk off the founders, so they can feel free to move forward not with one foot on the brake and one the gas," he said. "They can drive forward with a foot on the gas, and not have to put so much of their capital on the line."
Naratil said private equity firms typically seek to invest in a company for a period ranging from three to seven years and then sell them for a profit. In the interim between the purchase and the sale, they can provide both financial support and reserves of knowledge.
"It's that combination of growth capital plus domain expertise, plus a track record of really helping entrepreneurs really be able to grow their companies," he said.
Naratil's ties to Lightyear Capital go back to when he and the private equity firm's founder, Don Marron, worked together at the former investment bank and brokerage firm PaineWebber. Naratil, Marron and another executive, Mark Vassallo, were all at PaineWebber when it was acquired by UBS in 2000. Marron went on to found Lightyear Capital shortly afterward, and Vassallo took over as managing partner of the firm
Naratil himself was at PaineWebber and UBS for a combined total of 39 years. He last served as co-president of UBS global wealth management and president of the firm's Americas division.
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Naratil said he decided to retire in October 2022 after overseeing a plan to increase the firm's revenue and helping to shepherd it through the COVID-19 pandemic. UBS made Naratil's co-president Iqbal Khan the sole president of its global wealth management division, and it hired Naureen Hassan as president of its Americas division.
"When I decided to retire from UBS, and when I started to think about what I wanted to do next, I was looking for a positive answer to three questions," Naratil said. "Am I going to work with people that I like, trust and respect? Can I make a material contribution? And am I going to learn something new? I got a 'yes' answer to all of those with this opportunity at Lightyear."
