In an August 10, 2020 email response for comment, Heckenberg expanded upon Emigrant’s investment philosophy.
Financial Advisor asked Heckenberg what Emigrant looks for in a potential investment partner. “(We’re) looking for both a capital and a business advisory partner…growing net of a market with a robust management team that can be scaled,” he said.
Heckenberg adds that, though four deals have already been executed so far this year, the company is not done yet for 2020. He said he expects to close at least three more by the end of the year, despite the current economic climate created by the Covid-19 pandemic. In fact, Heckenberg said that Emigrant Partners/Fiduciary Network AUM has doubled in the past year-and-a-half since buying out the previous management team.
In 2018, billionaire NYPB&T head Howard Milstein exercised his right to take full control of Fiduciary Network, ousting founder Mark Hurley and replacing him with Heckenberg, who also took the reins of NYPB&T subsidiary Emigrant Partners, the bank’s new lead in making RIA investments. Today, the two men are embroiled in ongoing litigation.
Hurley and Milstein developed the strategic minority investment concept for the RIA business more than a decade ago. Unlike most of the private capital flooding into the profession, the Hurley-Milstein model intentionally avoids acquiring controlling interests in advisory firms.
Financial Advisor asked Heckenberg why Emigrant favors making a strategic minority investment in its partners, rather than acquiring them outright. His response made it clear that Emigrant remains convinced that model provides superior returns for private investors seeking to capitalize on the rapid growth of the RIA businetheir ss.
“(Since) we...support our platform firms in the M&A initiatives through sourcing, structuring and financing, we have found that advisory firms where the owners and the advisors own a majority of the economics and make the day-to-day decisions grow faster than firms looking for an outright investment,” he said.
Park Sutton Advisors, LLC served as exclusive financial advisor to Hollencrest Capital with a team led by Steven Levitt and Dan Erichson. Palmieri, Tyler, Wiener, Wilhelm & Waldron LLP provided legal advice to Hollencrest. Emigrant received legal advice from Seward & Kissel LLP.