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An Integrated Model: How "AITi" Moves Forward From Tiedemann-Alvarium Merger
6 March 2023
Mergers between multi-family offices have been few and far between, particularly when these marriages cut across national borders. But the chore of integrating MFOs into a new organisation with real international clout is worth it if done correctly, one firm argues. M&A and market scale
At the start of January, US-headquartered Tiedemann and London-based Alvarium tied the knot after what had been a long completion period –affected by the pandemic – and now that those firms have come together, they’re under the new brand of AlTi. This is a business with a combined $60 billion of assets, and a global footprint and international client base to match.
AlTi is planning to expand its reach in regions such as the Middle East and Southeast Asia, while extending its existing footprint in North America and Europe, Robert Weeber, president of International Wealth Management at AlTi, told this publication in an interview.
The merger of the two is a full integration and the firm isn’t interested in just buying businesses and leaving them largely alone, he said. “We are not interested in standalone businesses but rather those that seek the benefits of being part of a larger whole.”
“The secret sauce of our business is international collaboration,” Weeber said, adding that the international dimension can be seen in how, in the US, for example, 90 per cent of clients are covered by more than one office.
“Ours is a true ultra-high net worth and holistic multi-family office offering and we need a critical mass of assets to use full services. AlTi can take the mantle for our global reach,” he said.
Clients typically are those with between $50 million and $500 million in assets. In some cases, a client will be someone who has thought about creating a single-family office but realised that they either do not want the administrative burden, can’t attract and retain the talent or aren’t sufficiently large enough to justify that step.
“A growing part of our new business, particularly in the US and Europe, is where clients will say `I’m thinking of starting a single-family office’ and we have a consultative process…we can, for example, help set up asset allocation, review their service providers and identify where we can help plug the gaps.”
“For the most part we charge only a basis point fee on assets under management,” he said.
In the US, where the MFO market is biggest, there haven’t been a large number of MFO mergers and acquisitions, for various reasons. According to FWR editorial advisory board member Jamie McLaughlin (see his interview here), there are several headwinds that MFOs face: 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 ageing 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.
Deals that have taken place, however, include Pathstone (Federal Street, Convergent, Cornerstone) and Fiduciary Trust International (Athena Capital Advisors). In Europe, there was the merger a decade ago of Fleming Family & Partners and Stonehage, and Schroders’ purchase of Sandaire.
A large number of family offices were launched more than a decade ago, and there’s been a market for M&A consolidation more recently, Weeber said. The US market benefits from having one regulator, rather than multiple national ones, as in Europe; the benefits of a common culture, and generally less complexity.
“The only competitors we have with global footprint out there are the banks,” Weeber said.
Besides AlTi, there are few MFOs that operate with a global reach across such a range of capabilities, he said.
“This is a challenge and an opportunity for us. We see ourselves as truly global,” he added.
Mergers between multi-family offices have been few and far between, particularly when these marriages cut across national borders. But the chore of integrating MFOs into a new organisation with real international clout is worth it if done correctly, one firm argues.
M&A and market scale