Emigrant Partners announced yesterday that it has made a strategic minority investment in Dakota Wealth Management, a Palm Beach, Fla.-based full-service independent investment management firm with more than $2.5 billion in assets under management.
Financial terms of the deal were not disclosed.
Karl Heckenberg, CEO and president of Emigrant Partners (EP), said Dakota’s management team and its “impressive growth story” were key aspects to bringing the firm on board. “The business is only five years old, and they have been extremely successful,” Heckenberg said in an interview with Financial Advisor. He added that the firm also was a good cultural fit, “which is something that we look for.”
Founded by industry veteran Peter Raimondi in 2018, Dakota has integrated seven acquisitions and executed several advisor tuck-ins. Raimondi, who has more than 40 years of experience, previously built a couple of billion-dollar AUM RIA firms. His first firm, The Colony Group, which was launched in 1986, was purchased by Focus Financial Partners in 2011 and is among the largest RIAs in Boston.
Raimondi also founded Banyan Partners in 2006, which was sold to Boston Private in 2014 for $60 million. After that transaction, Raimondi served as CEO of Boston Private's RIA operaions for a period.
“At this stage of our development, we made a decision to take on a partner that could help us with our current and future capital needs as well as work closely with us to execute our strategic initiatives at a faster rate than we could on our own. We believe that Emigrant Partners is the ideal partner for our next phase of growth,” Raimondi said in a statement.
“This new partnership with EP will provide us access to an array of valuable resources while allowing us to retain our independence. We firmly believe that our clients, employees, and partners will benefit from this strategic partnership,” added Bryan Keller, chief strategic officer of Dakota.
Heckenberg said Dakota’s management team, including Raimondi, Keller and Carina Diamond, chief growth officer, was a big draw. “We look for firms where there is a strong management team that is not just centered around the founder,” he said, noting that most advisory businesses are focused on the founders who drive the business. “But we look for a broader, kind of deeper management team.”
He said EP spends a lot of time focusing on organic growth and looks to see if a firm is growing without the benefits of the equity and the fixed-income markets. “Is it growing without adding advisors, are they getting more wallet-share from their clients and then we look for broad-equity ownership,” he said. “We would want to be owned by all of the key people in the organization and we want to see equities really viewed as part of the compensation."
Heckenberg noted that EP has had 21 active investments with firms overseeing about $96 billion in AUM, but the firm has invested in close to 30 RIAs over its lifecycle, he said. “We’ve been fortunate, we never had to raise outside capital, we’ve always invested off of our balance sheets,” he said.
He said they have ramped up the business significantly in the last three years. “We probably deployed about four times more capital in the last four years than the previous 10 years and I think that this year we will probably be on track for one of our largest years ever,” he said, noting that they will probably close three new transactions in the first quarter.
And as for what the future holds for the business. Heckenberg said: “Our goal is never to be a public company or anything like that. We will never be backed by private equity. I think we will continue to operate as we are."