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Pathstone President Matt Fleissig quoted in Family Wealth Report article, “Multi-Family Offices Ride The RIA M&A Boom”

In the “Multi-Family Offices Ride The RIA M&A Boom” article by Family Wealth Report, Matt Fleissig addressed Pathstone’s recent merger and acquisition (“M&A”) activity.

How are multi-family offices faring in the booming M&A market for RIAs in the US?

After a second quarter COVID-induced slump, mergers and acquisitions among advisory firms have rebounded sharply, and are nearing the record highs recorded last year.

“The outlook for RIA M&A activity in the second half of 2020 remains strong,” according to Echelon Partners latest Deal Report. “The demand for high quality RIA firms has not waned…and there is increased likelihood that M&A activity levels could resume their 2019 pace.”

Investment banker firm Piper Sandler is similarly optimistic.

“Despite the COVID-19 pandemic, the backdrop for transaction activity in the industry remains strong,” according to a new report on the wealth management industry by the Minneapolis-based firm.

“Competition amongst an ever-growing group of buyers, several of which are backed by private equity sponsors, has pushed valuations to new heights and created a virtuous circle of M&A activity.”

Multi-family offices are very much part of the swelling M&A wave, albeit with distinctive characteristics.

“MFOs are definitely following the RIA trend when it comes to mergers and acquisitions,” says Scott Bush, chief client officer for Geller Advisors, a large New York-based multi-family office. “MFOs are carefully considering how they spend their time and money on inorganic growth.”

Aggressive Pathstone
Pathstone, the giant New Jersey-based firm that now has over $20 billion in AuM, has been one of the most active MFOs in the US mergers and acquisitions market.

Last week Pathstone bought Price Wealth, a $1.3 billion Austin, Texas-based wealth management firm serving UHNW clients. In late July, Pathstone acquired Cornerstone, a $4 billion Bellevue, Washington-based MFO serving 600 families.

Pathstone has used M&A to grow rapidly since its founding ten years ago after the breakup of Harris myCFO, snapping up major wealth managers including Kanaly Trust, Convergent Wealth Advisors and Federal Street Advisors. The firm was backed by capital from minority investors Fiduciary Network which last year sold its stake to private equity powerhouse Lovell Minnick Partners.

Armed with capital from its private equity partner, Pathstone made a decision early in the outbreak of the pandemic to “grow through the current environment,” said Matt Fleissig, president of the firm. The pandemic hasn’t noticeably changed valuations or deal structure, especially if deals were pending before the COVID outbreak began, Fleissig said.

What has changed since the pandemic, he noted, is the extent at which deals are now being done virtually.

“Virtual meetings have proven to be very effective,” Fleissig said. “When we were talking with Cornerstone, we had a series of small, intimate video meetings that proved to be deeper and longer than what we might have had with in-person meetings, which may have been more limited.”

Chicago-based Cresset Asset Management has also been on a buying tear this year, and in June it acquired PagnatoKarp, a well-known $2.3 billion MFO based outside Washington, DC in Reston, Virginia.

Click to read the full Family Wealth Report article.

Note the following corrections: 1) Pathstone's acquisition of Cornerstone Advisors and Price Wealth is pending and is expected to close at the end of September 2020. At that point Pathstone will oversee an approximate combined AUA of $22B. 2) Kanaly Trust is not part of any acquisition by Pathstone."