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Daunting UHNW Challenge: Can Pathstone Reach $50 Billion?

Charles Paikert, April 5, 2021


This news service has a detailed analysis of US multifamily office Pathstone, a firm that intends to be among the top firms of its type as big changes sweep through the sector.

Missing link
Nonetheless, it seems unlikely that Pathstone can achieve its lofty goals without several more major M&A transactions.

Pathstone averages 10 per cent organic growth a year, according to Fleissig, but the firm’s big growth spurts have come from big M&A deals such as its 2016 merger with Federal Street, which added $4 billion to its AuM.

Without inorganic growth, reaching $50 billion by 2024 is “impossible,” according to McLaughlin. Pathstone is on track to do one or two deals a year to “get better not bigger,” Fleissig said. M&A is a “very important” secondary goal for the MFO, Armstrong said, but organic growth is a priority. 

Part of that growth will be adding “in-house trust capability” this year, Armstrong added. And Fleissig notes that all of Pathstone’s investments are designed to enhance the firm’s high touch model. “Spending more time with clients means you can deliver better service,” he said. “And that still gets you incredible referrals.”

PE time horizon
As for Lovell Minnick, the private equity firm sees itself as a seven-year investor, Armstrong said.

Lovell Minnick’s strategic planning framework has a five-year time horizon and is refreshed every year with Pathstone’s long-term future in mind, he said. The investment is “not just about doing well for us but also for the firm in the future,” he maintained. 

Short-term gains at the expense of long-term growth would just be “window dressing for a sale” and counter-productive, Armstrong said. “Buyers see right through it. They’re too smart.”


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