Pathstone to acquire $45B firm, reach almost $160B in client assets

One of the largest fee-only registered investment advisory firms has agreed to make its largest acquisition ever, through a deal pushing its assets under management close to $100 billion.

Englewood, New Jersey-based Pathstone secured a deal to acquire Hall Capital Partners — a New York and San Francisco-based RIA catering to ultrahigh net worth families, endowments and foundations with 180 employees managing $45 billion in assets on behalf of 130 clients, the firms said Oct. 16. The parties didn't share any financial terms beyond stating an expected close date late in this quarter and the fact that management of the two RIAs as well as Pathstone's two private equity backers are each providing capital in the transaction.

"Pathstone's services are differentiated and serve as a natural complement to our research and portfolio management capabilities," Hall Capital Managing Partners Eric Alt, Sarah Stein and Simon Krinsky said in a joint statement. "Each of our independent, solutions-oriented businesses have proved durable in the face of increasing competition. Together we believe we can deliver something unparalleled in the market and continue to meet the evolving needs of our complex clients."

READ MORE: Pathstone paying $294 million to acquire $17B RIA Veritable 

Upon close, private equity-backed Pathstone would reach 23 offices, more than 750 financial advisors and other employees and nearly $160 billion in assets under advisement or administration. Almost 300 of those employees have stock in Pathstone. 

It represents the No. 3 firm on Financial Planning's annual RIA Leaders rankings of the largest fee-only RIAs. Pathstone had grown to a substantial size as a standalone multifamily office in 2014, when the firm received its first outside infusion of capital with a minority investment from the company then known as the Fiduciary Network. Back then, Pathstone had about $2 billion in AUM and 34 employees. 

Five years later, private equity firm Lovell Minnick Partners made what the companies described in a press release as "a significant investment" through a deal buying out Fiduciary Network and taking a stake of undisclosed size in Pathstone, which had $15 billion in client assets and 110 employees at the time. 

Lovell Minnick added to its investment last year, when another private equity firm, Kelso & Company, bought into Pathstone. At the time of that announcement, Pathstone managed more than $80 billion in client assets across 17 offices and 350 employees. 

In addition to those capital sources, Pathstone has secured term-loan financing from private credit firm Antares Capital, according to its latest Form ADV brochure filing.

The firm's rapid growth stemmed from deals like those acquiring Federal Street Advisors and Convergent Wealth Advisors in 2016; parts of Eaton Vance WaterOak Advisors in 2022; trust and estate firm Willow Street that same year; and giant firms Brainard Capital Management and Veritable last year. In the latter deal, the publicly traded asset management firm who sold the firm, Affiliated Managers Group, disclosed that Pathstone agreed to pay gross cash proceeds of $294 million for Veritable, a multifamily office with $17 billion in client assets.

Hall Capital is larger than any of those deals, though. The transaction constitutes the largest acquisition or business combination of an independent private client firm in the history of the industry, according to representatives for Pathstone.

Pathstone

"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," Matt Fleissig, CEO of Pathstone, said in a statement. "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."

READ MORE: These are the 20 largest fee-only RIAs, ranked by AUM

In its latest Form ADV disclosure with the Securities and Exchange Commission, Hall Capital lists 110 high net worth clients that have a combined $33.4 billion in assets under management among the firm's 128 customers and 64 pooled investment vehicles. About 20 of Hall Capital employees currently manage the firm's client relationships as advisors, according to representatives for Pathstone. 

Founder Katie Hall launched Hall Capital in 1994, when its purpose was "initially to manage the portfolios of a few family offices and their private foundations," the firm's ADV brochure stated. These days, the firm "builds, manages and oversees multi-asset class portfolios for families, endowments, foundations and other clients," the document said.

"This combination represents the natural next step for Hall Capital," Hall said in a statement. "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."