Pathstone announced today that it is buying Veritable, one of the first multifamily offices in the country built to serve the ultra-rich. The acquisition is part of an effort by the Englewood, N.J.-based firm to be a national brand in the private wealth sector.
Pathstone is acquiring Newtown, Pa.-based Veritable from its partners and Affiliated Managers Group Inc. (AMG), which bought the firm in 2012. Under the deal, Pathstone will acquire 100% of the outstanding equity interests in Veritable and AMG will receive all its transaction proceeds in cash at closing. The gross cash proceeds from the transaction will be about $294 million, AMG said in a statement.
At the close of the transaction, expected in the second half of 2023, Pathstone will add more than $17 billion in assets across 200 clients (averaging $75 million in assets each), bringing its assets under advisement and administration to more than $100 billion, the company said.
“We continue to look and extend our business both vertically and horizontally and continue to find things that make us better, not just bigger," Pathstone’s co-founder and CEO Matthew Fleissig said in an interview with Financial Advisor.
Fleissig said Veritable was a firm that Pathstone had looked up to and the partnership will allow the firm to provide a higher level of services to its ultra-high-net-worth clients. He noted that Veritable founder Michael Stolpher was considered by many a pioneer of the commercial multifamily office and he “has some incredible capabilities inside the firm from a very unique alternative platform to fixed-income management and in addition to that some proprietary technology including after-tax reporting.”
“We are very focused on perfecting the clients’ experience, Fleissig said, noting that Pathstone provides in-house services such as taxes, bill pay and accounting, some of which are kept in separate companies like it’s direct-indexing firm and trust company. “But the idea and the business model are to find all these services that our clients need and provide them in-house,” he added.
Stolper, who will become a co-chairman of Pathstone, said in a prepared statement that Veritable’s mission since its founding in 1986 has been to be the most trusted financial advisor in its clients’ lives and to cultivate an environment that embraces innovation. “We are culturally and philosophically aligned with Pathstone, and this combination will allow us to further deliver on our mission and execute on the generational promise we've made to our clients,” he said.
“While we are proud of what we have built as Veritable, we look forward to this next chapter being one of continued growth, collaboration, and delivering a truly differentiated solution in the independent RIA space,” Stolper added. His team of 87 individuals in suburban Philadelphia will join Pathstone.
Pathstone has had several noteworthy acquisitions in recent months, including $1.5 billion Rex Capital Partners in February; Willow Street, a $35 billion Wyoming Trust Company in December; WaterOak’s $3 billion advisory business in April of last year, and $2 billion Cornerstone Capital in 2021.
Fleissig said Pathstone’s goal is to get to a size and scale to compete directly with the banks and broker-dealers. He noted that there is a group of RIAs that are starting to get up to such a size and scale. “And at some point, we’ll start looking to take market share from the bank and broker-dealers,” he said.
As for what’s next for Pathstone, Fleissig said the firm will continue to look for services for centimillionaires. “We need to expand our scope of services and scale and find way to provide better services and truly become a good family office and the national brand for the ultra-high-net-worth.”