Thomas H. Lee bought RIAs before anyone else

Thomas H. Lee bought RIAs before anyone else
After leaving Thomas H. Lee Partners in 2006, he started another firm, Lee Equity Partners, that made a handful of significant transactions in wealth management shops.
FEB 24, 2023

Thomas H. Lee, a private investor who bought into the market for RIAs more than a decade ago, well before many of his competitors, died suddenly Thursday. He was 78.

According to the New York Post, which cited unnamed police sources, Lee committed suicide yesterday morning in his Manhattan office. He was found dead of a self-inflicted gunshot wound, according to the Post report.

He left Thomas H. Lee Partners in 2006 and later started Lee Equity Partners, which has made a handful of significant transactions in registered investment advisors and broker-dealers since then.

At his first firm, Lee's most prominent deal was the 1992 purchase of Snapple Beverage Corp. After his firm bought Snapple for $135 million, investing only $28 million of its own money, Lee sold it to Quaker Oats Co. for $1.7 billion two years later, according to Bloomberg.

At his second, self-named private investment shop, Lee had a keen eye for wealth management firms. In 2012, Lee Equity Partners took Edelman Financial Group private, paying $8.85 per share in cash, a premium of 43% over Edelman Financial’s previous closing price, putting the price of the deal at around $265 million.

In the decade since the transaction for Edelman, the mergers and acquisitions market for RIAs and broker-dealers has grown greatly, in large part due to private equity managers like Lee looking to capture the 25% to 35% annual returns typically generated by many RIAs.

To put the RIA mergers and acquisitions boom into perspective, 75 private equity firms invested in the space in 2008 prior to the economic crash, according to Echelon Partners, an investment bank, a number that increased to more than 275 firms in 2021.

In 2015, private equity firm Hellman & Friedman said it had purchased a majority stake in Edelman Financial Services for an undisclosed amount from Lee Equity Partners. That firm eventually became Edelman Financial Engines.

"I extend my condolences to his family, and encourage anyone experiencing suicidal thoughts to dial 988 to reach the 988 Suicide and Crisis Lifeline," Ric Edelman wrote in an email. Edelman is no longer part of the management team of Edelman Financial Engines.

Then in 2017, Lee Equity Partners invested in a broker-dealer aggregator, Atria Wealth Solutions, headed by former Morgan Stanley executive Doug Ketterer. Atria has made at least five broker-dealer acquisitions in the past five years and has 2,500 financial advisors working with more than $100 billion in client assets.

Lee Equity Partners also invested in 2021 in a San Diego RIA, Pure Financial Advisors, with $4.1 billion in client assets.

Meanwhile, Lee's old firm, Thomas H. Lee, in 2017 bought out certain institutional investors who owned stakes in Hightower Advisors in a recapitalization. Hightower currently has $103.5 billion in client assets.

"The family is extremely saddened by Tom's death," a spokesperson for Lee's family said in a statement.  "While the world knew him as one of the pioneers in the private equity business and a successful businessman, we knew him as a devoted husband, father, grandfather, sibling, friend and philanthropist who always put others' needs before his own. Our hearts are broken." 

180 Capital CEO explains why microcaps are magnificent

Latest News

JPMorgan tells fintech firms to start paying for customer data
JPMorgan tells fintech firms to start paying for customer data

The move to charge data aggregators fees totaling hundreds of millions of dollars threatens to upend business models across the industry.

FINRA snapshot shows concentration in largest firms, coastal states
FINRA snapshot shows concentration in largest firms, coastal states

The latest snapshot report reveals large firms overwhelmingly account for branches and registrants as trend of net exits from FINRA continues.

Why advisors to divorcing couples shouldn't bet on who'll stay
Why advisors to divorcing couples shouldn't bet on who'll stay

Siding with the primary contact in a marriage might make sense at first, but having both parties' interests at heart could open a better way forward.

SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives
SEC spanks closed Osaic RIA for conflicts, over-charging clients on alternatives

With more than $13 billion in assets, American Portfolios Advisors closed last October.

William Blair taps former Raymond James executive to lead investment management business
William Blair taps former Raymond James executive to lead investment management business

Robert D. Kendall brings decades of experience, including roles at DWS Americas and a former investment unit within Morgan Stanley, as he steps into a global leadership position.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.