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Prime Quadrant is gaining traction in the UHNW space
Prime Quadrant’s wealth advisory business model is both one of the most original and one of the least profitable in the country. They aspire to be the McKinsey of providing consulting services to ultra-high-net-worth individuals.
Mo Lidsky, a man with roots in Kharkiv, Ukraine and most recently residing in Cleveland, Ohio, is their leader. Although the media puts a lot of emphasis on Mike Katchen and Kurt MacAlpine, I think Mo Lidsky is the most experienced millennial executive working in this field.
It has been written about them in the past and continue to follow their progress because it is believed that their business model is one that should be studied and they are gaining momentum. This post will include some updates, which are as follows:
- They are continuing to bring in speakers of a high calibre.
- They have expanded their operations all over Canada and into the United States.
- A significant business associate of theirs in the United States is being acquired
A media division and an investment division are both part of the asset management company. Some companies don’t do much more than maintain a blog, but Prime Quadrant also organises events that feature speakers on the level of the Illuminati.
A sophisticated clientele would really respond positively to the fact that you have such a high-caliber network (as well as a cutting-edge manner of dress). New York City is an excellent location for locating clients of this type (where Mo Lidsky previously spent part of his youth).
However, in the fall of 2016, Prime Quadrant made a move in the United States by forming a partnership with Beekman Wealth Partners, which is based in New York City. Currently, we refer to this operation as Prime Quadrant US. Mo Lidsky provided a quote in which he expressed his excitement about his new relationship with Elizabeth Anderson.
Where does that leave the rest of you who have had the pleasure of meeting Mo? Elizabeth holds a Master of Business Administration from Harvard University and formerly worked as a manager at the endowment of Princeton University. As a result of the merger, three additional staff members became part of the team. Considering that Prime Quadrant already has a staff of more than 70 people, this new member is a relatively insignificant addition.
In the same way that Prime Quadrant does, Beekman conducts business on the basis of retainers. They were providing advice on assets worth 550 million dollars US. And all of this originates from just nine families. That works out to about $61 million on average for each relationship.
PQ hunts whales, as I’ve mentioned in a previous sentence. PQ now also has a limited presence in both Montreal and Calgary, in addition to its headquarters in New York. Additionally, it is in the process of establishing an office in Vancouver at the moment. It would appear that PQ possesses some degree of pricing power, which is contributing to an increase in profitability.
In a separate development, a takeover bid has been made on Focus Financial, a serial acquirer based in the United States that owns 35% of Prime Quadrant’s economics. Clayton, Dubilier & Rice, a private equity firm, has reached an agreement to acquire Focus for a total cash payment of $4 billion.
The initial public offering (IPO) price for Focus was $33, and the company is now going out less than 5 years later at $53. The goal of Focus was to acquire Registered Investment Advisors in order to target HNW and UHW clients, primarily in the United States.
Focus did not sell itself from a position of strength. According to the opinions of the analysts, if it were split up it would be worth more than the offer to acquire it. When Focus first began its consolidation strategy, the company was able to purchase RIAs at multiples ranging from 6 to 9 times their cash flow.
However, eventually, those multiples reached 20x as more aggregators of this kind came into existence. It just so happens that one of those buyers is our very own CI Financial. Focus CEO Rudy Adolf made a passing reference to CI’s activities in 2020 when he stated that he was witnessing “insane” prices paid for U.S. wealth managers and that “an international buyer” had just announced a transaction whose price “stunned” him. Adolf was referring to a price that “an international buyer” had just announced. It’s possible that he referred to them as “drunken sailors.”
The Chief Executive Officer of CI, Kurt MacAlpine, gave the following response: “I find it fascinating that people like to opine on the purchase prices that CI has paid for a business without any sort of facts whatsoever.” Therefore, there are some tensions there.
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