HighTower, one of the nation’s largest consolidators of wirehouse brokers and independent RIAs, is seeking a new CEO following a $100 million equity investment late last year by private equity firm Thomas H. Lee Partners. Elliot Weissbluth, the firm’s founder and current CEO, will move into the chairman’s slot.
The change continues a series of moves in the consolidator’s executive suite following the recent infusion of private equity that gave Thomas H. Lee a controlling interest. In May, former Schwab CEO David Pottruck, who served as HighTower’s first chairman, stepped down from that role.
Pottruck was replaced as chairman by Gurinder S. Ahluwalia, a Thomas H. Lee executive advisor. With Weissbluth now moving into the chairman’s role, Ahluwalia will become lead director and continue to provide strategic and operational guidance to management, according to a prepared statement.
As chairman, Weissbluth will continue to search for new advisory firms for HighTower to invest in, the statement said. It is also believed to be searching for additional executives to add to its management team. HighTower recently hired Marc Cabezas and have a capital partner with deep pockets and focus on growth.
In an interview in Financial Advisor's June issue, Weissbluth dismissed on-and-off reports that HighTower was contemplating an IPO. Citing the Thomas H. Lee investment, he indicated the consolidator no longer needed capital to grow.
At the time, HighTower had just purchased Salient Partners' Houston-based trust company with $4.5 billion in asset. The transaction expanded its footprint in Texas. Following the successful IPO of another consolidator, Focus Financial Partners, earlier this year, however, it is widely believed that several leading aggregators like HighTower and United Capital may be reassessing all their strategic options.
"It's not uncommon for a private equity firm or new buyer to consider bringing in a new CEO," said David DeVoe, who runs the RIA merger consulting firm, DeVoe & Co. "In this case, it seems like a very collaborative approach. Elliot is staying on as a very hands-on chairman and is shifting all of his energy toward growth and M&A."
Even if an IPO isn't the only goal of the new owners, DeVoe said Thomas H. Lee is likely to study the strategic landscape in a wide-ranging fashion. "I expect their criteria will include experience taking a half-billion dollar revenue firm to the next level - and perhaps even specific experience taking a firm public," he said. "An IPO is not necessarily the holy grail for a private equity firm investment, but clearly one of the options."
HighTower recently marked its 10-year anniversary. Back in June, HighTower reported that it had $55 billion in assets under management and 600 employees.
The firm's operations included 209 advisors on 92 teams with 76 offices in 33 states. Some of the 209 advisors are employees while others are independent advisors affiliated with the firm.
Different advisors access different services at various levels. Most pay more than 10 percent of their revenues to HighTower for these services. HighTower's approach to "building a turn-key solution for breakaway advisors has an unintended benefit," DeVoe explained. "It created a robust platform that is attractive to advisors contemplating their options."