An acquisition-hungry downtown investment firm has looked to Richmond’s biggest locally based bank for its next play in Virginia and its biggest deal ever.
Cary Street Partners is on the verge of acquiring Atlantic Union Bank’s Dixon, Hubard, Feinour & Brown registered investment advisory arm.
Upon closing later this month, Cary Street Partners will absorb DHFB and its $1.6 billion in assets under management. That will give Cary Street Partners $7 billion in assets.
It also will acquire offices in Roanoke, Charlottesville and Arlington, with 22 employees spread across the three outposts.
The deal does not involve Atlantic Union’s larger wealth management division, which remains in place with $6.5 billion in assets under management as of the end of the first quarter.
And the deal with Cary Street Partners doesn’t mean Atlantic Union is completely untethering itself from those operations. As part of the sale, AUB will take ownership of a minority stake in Cary Street Partners and have a seat on the firm’s board of directors.
While full financial terms of the deal were not disclosed, Joe Schmuckler, CEO of Cary Street Partners, said it’s the firm’s largest-ever acquisition.
Schmuckler said the purchase is aimed at continuing the firm’s growth in Virginia, where more than 60 percent of its business is derived. It has offices in Abingdon, Fredericksburg, Wytheville and Virginia Beach, in addition to its local outposts in Innsbrook and its corporate headquarters at Riverfront Plaza.
“This was an opportunity for us to further cement that and do it with a strong brand as a partner,” Schmuckler said. “The businesses they bought are really good businesses.”
Atlantic Union built its registered investment advisory subsidiary through several acquisitions beginning in 2016, when it bought Charlottesville-based Old Dominion Capital Management. Then in 2018 it acquired Outfitter Advisors in Northern Virginia and Roanoke-based Dixon, Hubard, Feinour & Brown.
Those purchases all were eventually brought under one legal entity in DHFB.
Schmuckler said conversations about a deal between the two companies was born out of their longtime banking relationship.
“We’ve been a client of the bank’s for quite a long while and began to talk to them about their strategy,” Schmuckler said.
Atlantic Union Bank President Maria Tedesco said the bank made the deal after a “thorough analysis of the changing landscape in the RIA industry and client needs.”
Tedesco emphasized that Atlantic Union’s wealth management business continues with trust and asset management services, private banking services and financial consulting.
“Those core businesses remain in place. In fact, we are now able to focus more of our key resources on driving the growth of these businesses which have always been integrated into the bank and part of our long-term strategy,” she said.
Schmuckler would not comment on how DHFB will add to Cary Street Partners’ revenue base. Atlantic Union disclosed $2.7 million in registered advisor management fees in the first quarter and $9.9 million in such fees for all of 2021, according to SEC filings.
Schmuckler said the three teams under the DHFB umbrella will soon operate under the Cary Street Partners brand. But he said they’ll continue to operate with some autonomy, as they did within the AUB system.
“These businesses are culturally unique. We want to allow those teams to maintain the integrity of their business and we want to support them well,” he said.
It’s the second acquisition announced by Cary Street Partners this year, following its purchase in March of National Wealth Management in New Jersey. The firm had previously acquired another New Jersey firm in 2019.
And the acquisitions are likely to keep coming, Schmuckler said.
“We have a desire to grow and to acquire good businesses,” he said.