The latest news of merger and acquisition activity in the North American wealth management industry.

TA Associates is planning to sell part of its holding in Wealth Enhancement Group, another example of a private equity firm seeking to unload such a stake, Barron’s has reported. 

The report said that Raymond James will be advising on the process, which has not yet begun. 

In 2019, Lightyear Capital sold its majority stake in Wealth Enhancement to TA. At the time, Wealth Enhancement had $11.8 billion in client assets. The wealth manager agreed in April this year to buy Pillar Pacific Capital Management, bringing its clients' assets to $32 billion. Pillar Pacific was Wealth Enhancement’s 23rd acquisition since 2013. 

TA, based in Boston, is expected to keep a large stake of Wealth Enhancement, the report said.

The report noted that TA is following the trend of private equity firms liquidating stakes in wealth managers, but keeping a majority holding. For example, Hellman & Friedman in March agreed to sell part of its stake in Edelman Financial Engines to Warburg Pincus. Thomas H Lee Partners also acquired a stake in Hightower in 2017. Carson Group, which is backed by Long Ridge Equity Partners, is looking to sell a minority stake.

The deals come at a time when M&A activity in the North American wealth sector has been busy, as chronicled by ECHELON Partners, DeVoe, among others. 

The vast bulk of RIA deals, which tend to be among firms serving mass-affluent/HNW clients, haven’t yet greatly affected those serving clients further up the wealth spectrum. In a forthcoming interview with wealth management industry consultant Jamie McLaughlin in this news service, he notes that there are a few exceptions to this, such those as involving Tiedemann (Presidio, Threshold); Pathstone (Federal Street, Convergent, Cornerstone), and Fiduciary Trust International (Athena Capital Advisors). McLaughlin argues that there are several barriers to M&A in the multi-family offices space: As partnerships, they have no capital per se other than their free cash flow. 

Partners can choose to compensate themselves or reinvest their annual distributions in the business; few have achieved “scale” as measured simply by operating leverage; the aging of key principals and their clients, who tend to be their contemporaries, implies a further diminution of firm valuations; due to the idiosyncratic nature of their clients’ needs, it has proven very hard to replicate work processes and/or leverage technology; and organic growth has also proven to be longer-cycle so firms' cost-of-acquisition tends to be higher.

TA, Wealth Enhancement, Raymond James and others cited in the Barron’s article did not return requests for comment, the publication said.