One of the industry's hottest independent RIAs has found itself a sugar daddy.
Boston Private Bank & Trust, a division of Boston Private Financial Holdings, is buying Banyan Partners -- one of the industry's fastest-growing wealth managers, with $3.7 billion in assets under management and $4.3 billion in total assets.
The deal creates a new powerhouse wealth management firm by combining Banyan with Boston Private Bank & Trust, consolidating approximately $9 billion in assets. The combined firm will be headed by Banyan founder and chief executive Peter Raimondi.
Boston Private will pay approximately $60 million in cash and stock upon closing the deal, the company said in a press release announcing the deal. Banyan "will also have the opportunity to receive additional consideration over a two year earn-out period," according to a press release announcing the deal.
The release did not specify what name the new firm would carry. Banyan ranked No. 3 this year in Financial Planning's list of the fastest-growing independent, fee-only RIAs, and No. 25 in the overall rankings by size.
'A BIG DEAL'
"This is a big deal," says San Francisco-based industry consultant and M&A specialist David DeVoe. "It doubles Boston Private's wealth management assets, expands their footprint and adds Banyan's wealth management expertise to their offerings. Banyan's clients will now have access to Boston Private's private banking and trust services to their offerings. The combined firms creates a nearly $10 billion national wealth manger with a seasoned M&A team and deep pockets."
Veteran wealth management investment banker Elizabeth Nesvold, managing partner of Silver Lane Advisors in New York, was also impressed by the deal.
"It's a wonderful transaction," Nesvold says. "Peter Raimondi has built a sizable business in a short period of time. I expect he will take some time to digest the combination and then get back to business on the deal front with Boston Private's capital resources."
Transitioning the two firms into a combined entity will indeed be Raimondi's first priority "for the short and medium term," he says.
GROWTH FOCUS
Once combined, the new wealth management company will concentrate on organic growth, Raimondi says. Acquisitions "will depend on the opportunistic situations we have in front of us," he adds.
Those appear most likely to occur in Southern California, Texas and Florida; Banyan and Boston Private already have strongholds in all three, but don't overlap, Raimondi says. "We share the desire to grow in attractive high-net-worth marketplaces," he says.
Organic growth will most likely take place where the two firms do have overlapping footprints, particularly in Boston and San Francisco.
WEALTH MANAGEMENT SETBACKS
This isn't Boston Private's first foray into a wealth management strategy. The parent company also owns four other RIAs -- Anchor Capital Advisors in Boston; Bingham, Osborn & Scarborough in San Francisco and Silicon Valley; Dalton, Greiner, Hartman, Maher in New York, and KLS Professional Advisors Group in New York and Los Angeles -- which will not be merged into the new entity.
The addition of Banyan will expand the holding company's total wealth management businesses to approximately $30 billion.
Acquiring Banyan "significantly advanc[es] the company towards its stated aim of creating a more fee-weighted revenue stream," said Clayton Deutsch, Boston Private's CEO, in the press release.
But the company has suffered some setbacks along the way -- most strikingly when one of the most prominent firms it had acquired, Sand Hill Global Advisors in Palo Alto, Calif., sought a buyback almost a decade after its acquisition.
"Boston Private has pivoted on its wealth management strategy a few times in the last two decades," Nesvold notes. "They need to stay focused now and have the right kind of governance in place for Peter to be successful in growing the combined business."
Raimondi says he is "not at all concerned" about Boston Private's past wealth management stumbles.
"Clay Deutsch has done a remarkable job leading the company's integration during his tenure," Raimondi says. "He has been very deliberate about he sees the future growth of the firms, and we see their trust and private banking services as a wonderful complement to our offerings. There are very few firms that would have excited me enough to give up 30 years of independence."
Key members of both company's management teams will assume senior roles in the new firm. Boston Private Bank's executive vice president, John Sullivan, will become chief business development officer and R. Thomas Manning, Banyan Partner's chief investment officer, will become the new entity's CIO.
The deal is expected to close in early October, according to Raimondi.
Ann Marsh contributed reporting to this story.
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