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Segall Bryant & Hamill Acquires Smaller Lookalike, Creating $20-Billion Giant

By Thomas Coyle January 10, 2018

Segall Bryant & Hamill, an independent employee-owned asset management company with a substantial wealth management practice, is buying Denver Investment Advisors — a firm with parallel attributes and an approach to money management that complements the acquirer’s structure and augments its offerings, according to both sides of the deal.

Twenty-three-year-old Segall Bryant & Hamill manages $12 billion in domestic and international equity and fixed income for institutional and high net worth clients. Denver Investments, which was founded in 1958, manages $7.2 billion in domestic and international equity, and core, long duration, and high-yield fixed income for institutions and wealth management clients.

Both firms advise on mutual funds as well as bespoke portfolios.

Acquisitions by RIAs with $1 billion to $5 billion under management have increased by almost 230% in the past two years, according to San Francisco-based investment banker and M&A market researcher David DeVoe.

“Officially, we’re being acquired,” says Cindy Knowlton, Denver Investments’ distribution chief. “But we see this as a union of two like-minded firms, and a natural and powerful combination.”

“Officially, we’re being acquired but we see this as a union of two like-minded firms and a natural and powerful combination.”
Cindy Knowlton
Denver Investment Advisors

Segall Bryant & Hamill — characterized by its CEO Philip Hildebrandt as “one of the largest firms nobody really knows” — seems to share this view. Hildebrandt says the merger with Denver Investments “will allow us to deepen our investment talent and broaden our investment offerings, geographical presence, client service and distribution capabilities.”

Derek Anguilm, who co-manages Denver Investments’ value research team, says the firms’ cultural affinity comes from Segall Bryant & Hamill placing “the same importance as we do on delivering consistently strong investment returns and establishing lasting client relationships through a strong service model.”

Knowlton also expects the tie-in with Segall Bryant & Hamill will result in back-office efficiencies translating to enhanced client service.

Hildebrandt, meanwhile, thinks Denver Investments will benefit from his firm’s somewhat more robust approach to sales.

In terms of governance styles, Hildebrandt says the two firms share a commitment to letting their investment teams “operate autonomously” in pursuit of their distinct philosophies and processes.

The merged firms will take Segall Bryant & Hamill’s name and branding, says Hildebrandt. In terms of geography, the addition of an outpost in Denver gives Chicago-based Segall Bryant & Hamill regional offices in Philadelphia, St.Louis and Naples, Fla.

Besides creating an independent asset- and wealth-management powerhouse with nearly $20 billion under management, the merger brings together a couple of rare birds: wealth units that make no bones about their preference for in-house asset management.

As wealth managers, both firms reject an open-architecture approach to money minding. For Segall Bryant & Hamill, this stance is in part linked to its antecedents as an offshoot of the old-line capital management firm Stein Roe Investment Counsel (now part of Atlantic Trust), and its contention that its home cooking “eliminates an entire level of cost,” says Hildebrandt. Perhaps more importantly, he adds, the firm’s independent research is “vetted by leading institutional investment consultants and then delivered in a customized, solutions-based approach” for clients of all types.

Philip Hildebrandt

Investment banker Elizabeth Nesvold of Silver Lane Advisors in New York sees the merger of Segall Bryant & Hamill and Denver Investments as “a really nice combination that supports the trend that size matters” — especially in a wealth management landscape dominated by rising compliance and technology costs and an emerging client base that demands unimpeachable value from wealth managers.

It’s also noteworthy, adds Nesvold, that this deal involves two relatively big-asset individual RIAs instead of at least one of them being a larger institution.

“It’s nice to keep it in the family,” jokes Nesvold, whose firm helps with transactions involving wealth firms, asset managers and fintech makers.

Financial terms of the deal between Segall Bryant & Hamill and Denver Investments weren’t shared. The transaction is expected to close before the end of March.

Chicago-based private equity firm Thoma Bravo is a financial partner of Segall Bryant & Hamill.

In other RIA-merger news, the Colony Group has added to a streak of tuck-ins over the past few years by acquiring Bethesda, Md.-based Bridgewater Wealth & Financial Management and Babylon, N.Y.-based Blue Water Advisors.

With these firms, Boston-based Colony has added eight offices for a total of 10 since it joined rollup firm Focus Financial Partners in 2011. As a standalone RIA Bridgewater became a Focus partner firm since 2009.

Before the transaction, Colony managed $5.2 billion, Bridgewater managed $890 million and Blue Water managed $380 million, according to their ADV filings with the SEC.

Colony’s CEO says he expects Bridgewater and Blue Water will “add enormous benefits, starting with talent and specialized expertise, and including deeper investment, technological, operational, and other capabilities” to the ultimate benefit of all their clients.