Barron's, Jun 17, 2020, by Steve Garmhausen
Chicago-based Cresset Asset Management has acquired fellow RIA PagnatoKarp, in Reston, Va., to create a $9.5 billion firm.
Both employee-owned businesses offer private wealth management and multi family office services. The $2.3 billion deal for PagnatoKarp is the third for nearly four-year-old Cresset. In March of 2019, the firm bought $500-million Evanston Advisors, in Schaumburg, Ill. Two months later, it acquired San Francisco-based Cypress Wealth Advisors, another firm with about $500 million in assets under management.
Cresset was founded by longtime private equity investors Eric Becker and Avy Stein, who saw a need for a robust combined offering of wealth management and family office services. Becker says he wasn’t aware of Paul Pagnato and David Karp’s firm when he founded his own. “If I’d have found Paul’s firm, I likely would have just become Paul’s client,” he says.
Instead, Becker’s firm is now buying Pagnato’s, in a cash and equity deal for an undisclosed price. “Every PagnatoKarp employee will get equity in Cresset,” says Pagnato. “David and I will get a lot of equity; we are very financially motivated to continue to pursue the vision here.”
Cresset clients have direct access to private investments in real estate and private equity through a related investment business, Cresset Partners. Pagnato cited Cresset Partners as an attractive element of the deal, noting that private investments probably account for 25% of his average client’s portfolio.
PagnatoKarp has clients nationwide, but its business has been concentrated in the mid-Atlantic. The firm will now have access to seven additional markets, including San Francisco, Denver and Seattle. Nationwide reach and investment capital for its family office platform were additional attractive elements of the deal, Pagnato says.
Meanwhile, PagnatoKarp’s digital capabilities are “one area where they will be of great help to us,” Becker says. For instance, PagnatoKarp has leveraged technology to drive account minimums for family office services down to $10 million. Cresset’s minimum is $15 million.
Pagnato and partner Karp left Merrill Lynch for HighTower Advisors in 2011, then formed an independent firm in 2016. The combined Cresset and PagnatoKarp will serve 800 clients, of which about 175 are family office clients, according to Becker.
Read Full Barron's Article HERE
PagnatoKarp specializes in Intelligent Wealth Management™ for CEO Founders, entrepreneurs, wealth creators and ultra-high-net-worth families. With True Fiduciary® standards of transparency, your interests come first with a focus on asset protection, cash flow, and opportunities. PagnatoKarp's goal is to simplify and elevate your life so you have more time to spend on what matters to you most.