Bob Wacker wasn’t actively looking to sell his firm in 2007, but a series of events led him to make that decision.
He wanted to get started on succession planning, he was facing some health issues and he was approached with an offer from Pacific Capital Bancorp. The San Luis Obispo, Calif.-based RIA, with about $465 million in assets under management at the time, took the bank up on its offer and the deal closed on New Year’s Day 2008.
“It accomplished the things I wanted to do in terms of security for my family,” Wacker says of the deal. “Fortunately, it was a cash deal with an earn-out, which was not unusual,” he says, explaining that when he sold the firm, the stock was at $17.50 a share. The bank ended up selling Wacker’s former firm a year and a half later for 20 cents a share to a private equity firm.
Things had gotten off to a good start with the bank. “In our case, they never changed the name or how we did business,” Wacker says, explaining that the firm was allowed to continue on with its fee-only structure. “That was a big part of our culture,” he says.
“They didn’t mess with us and they didn’t know who our clients were,” he says. “We were fortunate except for having it on the front pages of the paper … it’s a small town … but besides that, people soon forgot that we were part of the bank.”
But the financial crisis was in full swing, and Pacific Capital Bancorp immediately ran into trouble, Wacker says. The bank had home loans throughout California, Nevada and other areas, and the crisis was not forgiving.
In 2012, the bank was taken over by a private equity firm that turned around in about 18 months and sold it to Union Bank of California, which is owned by Mitsubishi UFJ Financial Group, one of the world’s largest bank holding companies. Wacker says Mitsubishi bank had its own wealth management arm.
“They could have tried to integrate us, but they realized that would have ruined us because we do things so differently, so they decided to spin us off once they purchased the whole bank’s assets,” he says.
Wacker noted that several buyers had their eyes set on the firm and they all wanted to know if he would stay on. “I wouldn’t agree to that. This was in 2013 and I was 64 so I said no.” He says he wasn’t sure what the offers entailed but that didn’t matter because as it turns out, Wacker had a better plan. He and the firm’s seven other advisors made an offer to repurchase the firm, which Mitsubishi accepted. The name was changed to Wacker Wealth Partners, which at the time had $661 million in AUM.
“So we have eight shareholders at different levels. I am now 70, so I offer shares and people buy them. I have less than I had seven years ago and some people have more than they had seven years ago,” he says.