AlTi Global to stay focused on M&A

'There are some high, high quality firms that have been competitors of ours for years that are willing to engage,' says AlTi CEO Mike Tiedemann.

After two acquisitions so far this year, AlTi Global Inc., the giant registered investment advisor that targets wealthy clients, continues to see potential mergers and acquisition targets on the horizon.

With $68 billion in client assets, AlTi Global has had a busy year.

Since its merger with a special purpose acquisition company in January that resulted in its listing on the Nasdaq, AlTi Global has made two acquisitions. In May, it announced the purchase of AL Wealth Partners, which is based in Singapore and has more than $1 billion in client assets. Three months later, the firm bought a Swiss-based multifamily office with $1.3 billion that works with wealthy clients in Italy, as well.

There may be fewer firms on the market right now, but those that are remain attractive, Mike Tiedemann, AlTi Global’s CEO, said during a conference call Tuesday afternoon after the release of the firm’s third-quarter earnings.

“There are less firms, but there are some high, high quality firms that have been competitors of ours for years that are willing to engage and see us as a viable long-term option for them,” Tiedemann said.

“We are a destination, a firm with a unique platform, and we have a global footprint,” he said. “When a firm that deals with the ultra-high-net-worth client is evaluating M&A strategic decisions, we are a very credible counterparty.”

The market for RIA acquisitions has shifted this year, noted one industry analyst, who asked to speak anonymously. Deals are getting done but buyers have become more cautious, particularly as RIAs begin to integrate firms.

Interest rates have spiked in the past two years, making it costlier to borrow money for deals. Meanwhile, some potential RIA buyers, like private equity funds, are staying on the sidelines because they missed the early stages of the M&A frenzy.

“We saw valuations peak in 2022 at the height of the RIA M&A boom,” the analyst said. “Now it’s still a very active auction process and there’s a healthy level of activity, but buyers are being a little more disciplined. Eighteen months ago, deals were getting done faster. Buyers right now are more careful with due diligence.”

In its earnings slide show, AlTi Global said it was looking for “at least” $16 million in annualized net cost savings, as well as a long-term goal of EBITDA — earnings before interest, taxes, depreciation and amortization — margins in mid-30s. EBITDA is a key cash flow metric for determining an RIA’s value, and firms typically have EBITDA margins ranging from 25% to 40%.

The firm reported revenue of $49.2 million for the quarter ending in September, and $159.2 million over the first nine months of the year. Net income for the quarter according to GAAP, or generally accepted accounting principles, was a loss of $171.1 million, much of that the result of an impairment loss of $154 million.