A Shockoe Slip financial firm has new place to hang its hat in the Lone Star State.
Cary Street Partners last week acquired Texas-based Riverstone Wealth Management, giving the 11-year-old Richmond company a foothold in Austin and San Antonio as it continues its expansion throughout the South.
Specific terms of the deal were not disclosed. Cary Street Partners managing director Kip Caffey said that cash and stock were paid to the Riverstone camp and that its owners are now shareholders of Cary Street Partners.
Caffey said the company is set on trying to reproduce the model of the large regional wealth management and investment banking firms that disappeared in the late 1990s and early 2000s after being gobbled up by large banks.
The “big four” that serve as the model were the former Richmond-based Wheat First, J.C. Bradford in Nashville, Robinson Humphrey of Atlanta and Morgan Keegan in Memphis. They were all acquired after the repeal of the Glass-Steagall Act, a law that prohibited banks from being in the investment banking business.
“We all came out of those regional firms, and our idea was to have a geographical strategy that mirrored those firms,” Caffey said.
The plan, Caffey said, is to go “from Virginia down through and into Texas, sort of in a crescent across the southeast. We hopped over a couple of states in doing this, but it was the right group of people and the right transaction.”
The firm will continue to look for wealth management and investment banking talent across the South, he said.
Cary Street Partners now has 11 offices, including three across Virginia in addition to its headquarters at 1210 E. Cary St. Its headcount sits at 97.
Riverstone brings with it 23 employees, offices in Austin and San Antonio, more than $5 million in annual revenue, and a wealth management business that oversees more than $400 million in client assets. Cary Street Partners manages $2 billion in assets for its clients following the deal.
Brian Smith, one of the founders of Riverstone, said the firm launched in 1995 in Austin and has focused largely on managing the wealth of high-net-worth individuals and families.
“We have a term we use, ‘everyday millionaire’ – a person that’s unassuming but has a decent net worth,” Smith said.
Riverstone had been in discussions with about a half-dozen potential buyers before joining Cary Street Partners, Smith said. The deal was in the works for about a year.
“We had been approached a few different times over the years,” said Smith, who is now managing director for Cary Street Partners in Austin. “For the right firm, we were very attractive.”
The Riverstone brand will remain for now as a division of Cary Street Partners.
But eventually, Smith said, “We’ll be flying their flag here in Texas.”
The acquisition opens avenues in the Texas market for more investment banking deals, although Caffey said the firm would look to keep a balance of its revenue at about 80 percent from wealth management operations and 20 percent from investment banking.
With the addition of Riverstone’s $5.4 million in annual revenue, Caffey said the deal puts Cary Street Partners closer to achieving its goal of $75 million to $100 million in annual revenue.
“Our longer term plan over the next five years calls for getting into [that] revenue range,” Caffey said. “We will hit that in the course of our five-year plan.