HighTower CEO confirms it is buying WealthTrust, its biggest deal ever

Sixth RIA deal in 18 months pushes HighTower's AUM to nearly $46 billion

Apr 13, 2017 @ 1:54 pm

By Jeff Benjamin

HighTower CEO Elliot Weissbluth confirmed Thursday that his firm is buying WealthTrust, its largest acquisition ever.

The addition of WealthTrust's $6.4 billion in client assets lifts HighTower's total client assets to nearly $46 billion, which is nearly a four-fold increase from four years ago.

The announcement from the Chicago-based consolidator comes less than a week after it was reported that HighTower was in talks to buy WealthTrust.

According to a statement, HighTower financed the cash-only acquisition through a $75 million expansion of its credit facility to $245 million, led by BMO Harris and lenders Regions Bank, Fifth Third Bank and KeyBank.

The deal is HighTower's sixth RIA acquisition in the last 18 months, reflecting the increased focus on RIAs as opposed to its original focus on providing a platform for breakaway brokers.

"It's a fascinating development to see a consolidator acquire [another] consolidator like this," said David DeVoe, managing partner at consulting firm DeVoe & Co.

"I think this demonstrates that HighTower has committed to RIAs and is not just focused on breakaway brokers," he added. "This is clearly putting a stake in the ground, and it also says something about the ability of HighTower to evolve its business model and try new things."

Mr. Weissbluth said RIAs now make up about 40% of HighTower.

While there is not a specific goal to bring the RIA side and breakaway broker side into a 50/50 balance, Mr. Weissbluth confirmed earlier this year that its RIA business would see the most growth this year.

"We've been lined up for a focus on RIAs since we announced it internally in 2011, and publicly since 2015," he said. "We will continue to do more RIA acquisitions."

He added that the HighTower model is benefiting from the Department of Labor's fiduciary rule.

"On the wirehouse side they're dealing with a massive conflict of interest, and on the RIA side they're dealing with the technology and regulatory headaches of running a business," Mr. Weissbluth said. "Our solution is to solve those problems."

While the WealthTrust acquisition is still technically subject to some regulatory approval, Mr. Weissbluth said, "The deal is done and there is no risk that this deal doesn't happen."

He declined to specifically discuss the transaction details, but confirmed that $70 million "is in the right zip code."

Mr. Weissbluth also said the financing of the WealthTrust deal should put to rest speculation about the strength of HighTower's financing model, which has been challenged by former executive Ed Friedman.

"We're currently in litigation with Ed for making defamatory and baseless comments," said Mr. Weissbluth. "That's fake news by a disgruntled and upset former employee who was terminated. Banks like BMO don't lend money unless the facilities are highly solvent."

Mr. Friedman, who now works at HighTower competitor Dynasty Financial Partners, did not respond to a request for comment for this story.

HighTower, which was formed in 2007, currently has 59 offices in 27 states, as well as 202 financial advisers.

WealthTrust has affiliate RIAs in Arizona, Illinois, Kentucky, Missouri, New Mexico, Ohio, Pennsylvania, Texas, Tennessee, and Virginia.

"If you think about what we've been doing since we launched this business, this is more of the same kind of acquiring firms and welcoming teams onto our platform," Mr. Weissbluth said.

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