Yet another Newport Beach wealth management firm has attracted the interest of Wall Street.
The Bahnsen Group, which has grown to $9.5 billion in assets under management in the past decade, will be acquired by Hightower Advisors, one of the nation’s largest registered investment advisors with $350 billion in AUM.
“With deeper integration across Hightower, we are well-positioned to continue investing in our team and pursuing both organic growth and strategic opportunities,” founder and Managing Partner David Bahnsen said. “This venture leverages the strengths of each party to the benefit of our clients.”
It’s the fourth large-scale deal involving a firm working on Newport Center Drive in recent years: Corient Capital was acquired by CI Financial Group; Beacon Pointe received an investment from KKR & Co., and United Capital Financial Partners Inc. was purchased by Goldman Sachs.
“This is a natural evolution of a highly successful partnership,” Hightower CEO Larry Restieri said in a statement. “David and his team have built a leading wealth management business with a clear investment philosophy and strong client relationships.
“This next phase allows us to further align strategically and bring the full capabilities of Hightower to support their continued growth—both organically and through acquisitions.”
The transaction is expected to close in the third quarter.
The Hightower Edge
It’s another feather in the cap for Bahnsen, an outspoken conservative commentator who has boosted his assets under management about 17-fold since he started in 2015 with $575 million AUM.
At the time, Bahnsen became an affiliate of Hightower. Founded in 2007, Chicago-based Hightower provides a hybrid platform that either acquires RIAs or provides back-office services to RIAs that want to remain independent affiliates.
For Bahnsen, the key to being acquired by Hightower was retaining control of his company.
“We became far and away the most successful business within their company, and they didn’t actually own us,” Bahnsen said.
“The solution was for them to buy us. But I wasn’t willing to be bought if I couldn’t run it with full control. They see it as best for them. Why would they want to touch it?”
The Bahnsen Group said it will more deeply integrate with Hightower’s platform across technology, operations, compliance, wealth solutions and advisor services.
The Bahnsen Group will continue to operate under its established brand and will add “A Hightower Company” to its name and logo.
In recent years, The Bahnsen Group, which has more than 100 employees and a $65 million annual run rate, has expanded offices to Denver, Atlanta and Charlotte, North Carolina. It’s opening its 13th office in Santa Barbara.
A key aspect of the deal is that Hightower will provide additional business administrative support.
“That’s a huge load off us,” Bahnsen said. “We are not getting rid of any of our people. Our investment department stays the same.”
A third benefit is Hightower has given Bahnsen “a significant amount of growth capital.
“They’re expecting me to expand the business,” he said. “It was all completely organic before.
“We’re in the smart acquisition mode.”
The Unconventional Marketing Strategy
Bahnsen is the son of a Protestant pastor who preached at a small Orange County church and traveled the world speaking on philosophy. His father, who died at age 47, “was my hero.”
Bahnsen is a disciple of economist Milton Friedman, a big fan of Ronald Reagan and a “National Review kind of conservative.” In fact, he’s on the board of trustees of the National Review, one of the country’s most eminent conservative publications.
Bahnsen also helped found nondenominational evangelical Pacifica Christian High School in Newport Beach.
Bahnsen knows Wall Street well, having served as a managing director at Morgan Stanley for almost a decade before starting his own company at age 40.
Bahnsen has gone against the orthodoxy by publicly discussing his political views on networks like Fox Business News. He often bashes Democrats and has called the “liberal” media corrupt and evil.
He has introduced famous conservative speakers like Karl Rove and “dearest friend” Larry Kudlow at events sponsored by the Lincoln Club, an Orange County group of Republican businesspeople.
Bahnsen said some of his clients are liberal.
“Left-wing investors may be turned off by some of my views, but they admire the fact that I am authentic, that I don’t feel the need to straddle the fence,” Bahnsen said during an interview in 2017.
“I’ll tell you a secret about left-wing people. They also want their money to grow.”
The company generates new business from potential clients at churches, political groups and alumni associations and by speaking or writing blogs, social media posts and white papers, he said.
What was the key to growing to $9.5 billion, which was a 31% annual organic growth rate in the past decade?
“I share the secret sauce all the time, but some don’t believe me,” Bahnsen said.
“I got very comfortable about sharing my belief system, my faith, my politics, the Fed. Our growth has come from our content platform. It led to an awful lot of organic growth.
“It’s totally contrarian because most people believe it’s best not to say anything.”
