Less than two years after expanding in its hometown with an acquisition in Innsbrook, a downtown Richmond-based financial firm has yet another deal in the works, this time giving it a bigger foothold in the Northeast.
Cary Street Partners, through its holding company Luxon Financial, later this month will absorb Summit, New Jersey-based investment advisory Traditional Capital Management.
While terms of the deal are not being disclosed, Tradition brings with it nearly $700 million in client assets under management – bringing Cary Street Partners’ total to around $3.5 billion.
“It’s a significant step up for us,” said Luxon CEO Joe Schmuckler. “It gives us a real anchor in the suburban New York and New Jersey market. That market is very deep. There’s a lot of people and a lot of assets. To have our nose under that tent is very good for our firm.”
Schmuckler would not comment how big of a bump to the bottom line Tradition will be, saying only, “it’s an accretive deal.”
Traditional Capital partners Benjamin Halliburton, Michael Provine and Chris Trompeter, who founded their firm in 2000 out of Brundage, Story & Rose, will take an equity stake in Luxon, Schmuckler said. The two sides had been in discussions for about 18 months.
The deal is a continuation of a strategy Cary Street Partners and Luxon put into place in recent years, as it has evolved to focus more on its wealth management operations and less on investment banking.
Schmuckler said that strategy and its eye toward deals are fueled by consolidation in the registered investment advisor realm, which he says is caused by changes in technology.
“In order to compete, firms have got to build scale,” he said. “Scale comes in the form of people and knowledge.”
Tradition Capital will bring over about 20 employees when the deal closes as expected later this month. The combined firm will have around 110 employees in 15 offices in six states. Those include its Richmond headquarters on the 10th floor of the Riverfront Plaza West tower, as well as an Innsbrook office it took on with its 2017 acquisition of Rafalko Advisors.
Luxon already has a small presence in New Jersey through its insurance division, an office that will eventually combine with the Tradition group’s office.
The Tradition brand will change as part of the deal, taking on the moniker Tradition Asset Management in the near-term. Eventually it will adopt the Cary Street Partners brand.
Schmuckler said the firm has a “healthy pipeline” of prospective deals in various stages of discussions and will continue to hunt with a discerning eye. He said the firm is being careful not to grow in an overly aggressive way, keeping in mind some in the industry that are doing so with the help of larger private equity backing.
“The word should be on the street that we’re interested in growing with the right partners,” he said. “What I want to avoid is the sense that we’re out just looking to do deals. When I think of deals I think of financial rollups. We want scale, but we want it with people who want to be part of a single brand.”