HighTower, a Chicago-based wealth advisory firm, is acquiring WealthTrust from Lee Equity Partners, bringing the company's client assets to nearly $46 billion, HighTower announced Monday.
The terms of the deal were not released but it was believed to be about $70 million, sources said. Executives at HighTower did not reveal how many of the 15 or so WealthTrust firms owned by Lee Equity they were acquiring but it was believed to be about 8 or 9. Sources said three of the firms generated over half the profits. Cleveland-based Fairport Asset Management, which manages about $1.5 billion, was believed to account for nearly one-third of the profits by itself.
The acquisition is the largest in HighTower’s history, adding $6.4 billion in client assets. “This is a transformational transaction for HighTower,” says company CEO Elliot Weissbluth.
It was also unclear whether the transaction marked a strategic shift for HighTower. In the past, HighTower had focused primarily on corner-office, breakaway brokers from the major wirehouses. However, private equity firms reportedly have soured on the brokerage business, so HighTower could recshaping its business.
HighTower financed the cash-only acquisition through a $75 million expansion of its credit facility to $245 million, which was led by BMO Harris and lenders Regions Bank, Fifth Third Bank and KeyBank, HighTower said.
“Our new facility will allow HighTower to fund additional acquisitions and drive greater momentum in the marketplace,” said Sagar C. Kurada, HighTower's chief financial officer.
Following the WealthTrust acquisition, about 40 percent of HighTower teams will originate from RIA backgrounds, either as previously independent teams acquired by HighTower or as independent RIAs leveraging HighTower's platform of services, the firm said.
Lee Equity Partners is a New York City-based private equity firm that partners with management teams to build companies with growth potential.