Another RIA Gets Private Equity Backing And An Exit Path For Principals

Friday, September 23, 2011 00:17
Another RIA Gets Private Equity Backing And An Exit Path For Principals

Los Angeles advisory firm Westmount Asset Management has joined the list of RIA firms accepting capital from private equity funds in order to expand their business and give management more equity in their own company.


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Rosemont Investment Partners has stepped up to buy an unspecified minority stake in Westmount, which manages about $1.4 billion for clients.


The goal here is to recapitalize the firm while retaining operational control -- and, naturally, keeping the investment platform free from any conflicts of interest created by a corporate client with its own retail products to push.


Chief operating officer Chris Werner and senior vice president Mike Amash are being promoted to partner as part of the deal.


In general, this demonstrates yet another way that advisors can manage their succession plan. Nobody's leaving the firm, but eventually they'll be able to retire and cash out some of the capital that Rosemont is currently pumping into the company.

Comments (1)

You have to remember that when you take PEG (private equity) money there is about a five year time frame before they want to have a liquidity event. While private equity can be an excellent exit strategy for larger RIA firms there are some things those firms should keep in mind as part of the deal.

The three most important things that will have to be done is to build a recurring revenue model, have customers be customers of the firm and not clients of advisors and to have a method for acquiring new clients and assets.

Josh Patrick
Joshco0752 , September 27, 2011

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