HighTower to Buy Salient Private Client in Houston
HighTower, the 10-year-old acquirer of independent advisory firms, has signed a definitive agreement to buy Salient Private Client, a Houston-based registered investment adviser managing $2.12 billion of discretionary assets for more than 2,500 accounts.
The deal, fueled by a recapitalization early this year from private equity firm Thomas H. Lee Partners, illustrates HighTower’s strategic shift to buying substantial wealth practices as opposed to its founding philosophy of partnering with fromer wirehouse brokers seeking to become fee-based advisors.
Salient Private Client’s 42 employees, including 16 “relationship managers,” represent HighTower’s biggest single-office acquisition and will increase its total client assets to “approximately $55 billion,” the Chicago-based rollup said in a press release on Tuesday. The total includes non-discretionary family office and trust assets at Salient, according to John Blaisdell, chairman and chief executive of parent company Salient Partners.
The deal will give HighTower its first footing in Texas and its first trust business, Salient Trust Co., LTA. The unit will be rebranded as HighTower Trust Services and marketed through many of the RIA’s 87 advisory practices and 190 advisors, the companies said.
“We did not did not have the scale to support a true standalone trust platform,” said Blaisdell, who will continue to run Salient’s almost $9 billion asset management business and is not joining HighTower.
The companies did not disclose terms of the deal, which is expected to close in the third quarter.
Thomas H. Lee’s promise of $100 million of new equity capital for HighTower was a critical factor, Blaisdell said.
“We are five or six times larger than their average deal,” he said of HighTower. “We were aware of their recap, and knew that Thomas Lee bought into their long-term view of a fiduciary-oriented approach, and had some dough.”
Salient, whose Texas customers have $10 million or more of liquid assets, will be renamed HighTower Private Client and essentially serve as its new owner’s ultra-high-net-worth platform. HighTower’s advisors will distribute some of Salient Asset Management’s energy, real estate and liquid alternatives products, Blaisdell said.
Salient and HighTower have common platforms for performance reporting and other applications, and the Chicago-based firm works with Salient’s custodians Fidelity Institutional on the private wealth side and Reliance on the trust side, Blaisdell said.
After about three months of negotiations with HighTower CEO Elliot Weissbluth and Thomas Lee representatives, he said he is confident that the firms have compatible cultures.
Salient’s roots date back to the 1980s, when co-founders Andrew Linbeck and Hank Sherman were working as brokers at Kidder, Peabody, joining up with Jeremy Radcliffe when Kidder was bought by PaineWebber. The trio transitioned to a hybrid brokerage-fiduciary model by creating Redstone Consulting in 1998, established Salient as “a pure fiduciary practice” in 2002 and merged with Houston’s Pinnacle Management & Trust Co. the following year.
Stephen Reckling and Stephen D. Strake, Pinnacle’s founders, will continue to be involved with the trust company when it moves to HighTower.