The emergence of top-tier wealth management houses in North America continues apace. The latest deal involves Cresset Asset Management and Berman Capital Advisors. The story also underscores the speed of Cresset's advance since it was founded in 2017.

The fall is already proving to be a busy period for North America wealth management M&A. The latest deal sees Cresset Asset Management agreeing to tie the knot with Berman Capital Advisors ($4.7 billion AuM), building a multi-family office with $20 billion of assets under management.

The combined entity will operate in 11 markets around the US, and the merger is expected to complete on September 30, 2021, Cresset said in a statement yesterday.

Berman has offices in Atlanta and Austin – two relatively fast-growing parts of the country. It has a team of 33 people, all of whom will join Cresset.

“Cresset is the partner we’ve been seeking to take our business to the next level, offer our clients an even broader array of services, and provide career development opportunities and increased ownership for our team,” Justin Berman, founder and CEO of Berman Capital Advisors, said.

Culture fit
The Berman deal fits the Cresset approach in the same way as that of PagnatoKarp, which Cresset bought in June last year, adding a range of services including area such as concierge, Avy Stein, founder and co-chairman of Cresset, told Family Wealth Report in a call. 

“The thinking behind this deal, is, like that with PagnatoKarp, to look for people with a similar culture, great ethics, true fiduciaries to their clients and providers of holistic services. We want firms who understand `private Alpha’,” Stein said. He said that organic growth has been the main driver of Cresset’s progress so far. “We are not a roll up, and inorganic growth does not make up a high percentage of our growth….it is only about a third,” Stein said. 

This merger was different from many other M&A transactions currently occurring, Stein said. “We are merging with great firms that fit with what we do and enhance what we do, and they are integrated with our brand. The approach is different from firms that are serial acquirers without integrating to a single, differentiated offering.”

Stein added that no-one at Berman will lose their jobs as a result of the deal. “There is no overlap or duplication. There are some people who will be moving around, some to national roles,” he added. 

Merger surge
Driven by a desire for scale, brand power, a desire by some owners to exit, and forces such as rising regulatory costs, wealth management M&A has been busy.

As also reported yesterday, the private equity house TA Associates, agreed to make a “strategic growth investment” in Caprock, the multi-family office with more than $7.5 billion of assets. That announcement came a few days after Sanctuary Wealth, a group of advisory businesses, bought a stake in InnoVise Family Wealth Advisors, a multi-family office. And within recent days (September 20) Tiedemann Group, an MFO, agreed to merge with London-based Alvarium, another MFO. That deal extends Tiedemann’s reach around Europe and Asia, among other places.

What is striking is that so far, most of the M&A action has been in the RIA space, while multi-family offices haven’t quite matched the pace. However, it appears that momentum in the MFO space is building. Among deals focused more on the ultra-high net worth end of the street have been Tiedemann (Presidio, Threshold, Alvarium), Pathstone (Federal Street, Convergent, Cornerstone) and Fiduciary Trust International (Athena Capital Advisors).

Cresset’s rise has been rapid; the multi-family office was launched in 2017 by private equity and investment sector figures Eric Becker and Avy Stein. The firm is keen to stress that while it has partnered up with some firms such as Brennan, two-thirds of its AuM growth has been organic. 

The Cresset-Berman Capital transaction exemplifies this trend where even the largest RIAs seek partnerships that can amplify their scale and reach. In particular, this strengthens Cresset's position as a leading UHNW wealth manager. Cresset has grown from an idea to over $20 billion in only four years. They have proven their ability to integrate firms successfully and build a common culture and mission," David DeVoe, founder and CEO for DeVoe & Company, said. His firm tracks M&A and other corporate developments in the wealth sector. 

In June 2018 Cresset caused a stir and signaled its growth ambitions when it hired Michael Cole, formerly president and founder of Ascent Private Capital Management, to be CEO of its new family office arm. A team of former Ascent senior figures also joined him. In the following months Cole rapidly built out the business across the US, including in such fast-growing markets as Florida – which appears astute given the influx of HNW individuals to that part of the US. Cole left Cresset in June 2020; he resurfaced as managing partner for R360, an “invitation-only league of strategic wealth creators” for people with at least $100 million in net wealth.