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Boston wealth manager strikes out on its own, defying trend

While many of its peers are being acquired by larger companies, Boston wealth management firm Anchor Capital Advisors is going in the opposite direction — toward independence.

Anchor recently announced that it had completed its $47 million buyout transaction with Boston Private Financial Holdings (Nasdaq: BPFH). For more than a decade, Anchor was owned by Boston Private, with employees owning 17 percent of the firm. Now, it is 70 percent owned by its employees, with a Lincoln Peak Capital affiliate owning the remaining stake. The firm serves both individual and institutional investors through nine equity and fixed-income strategies.

It’s rare to see an asset management firm go from being owned by a larger company to employee-owned. More often, industry watchers say, such firms are giving up a controlling stake to a firm like Affiliated Managers Group (NYSE: AMG) or merging entirely with another company.

But Anchor, which manages about $9 billion in assets, now stands alone for the most part. A good number of its employees are in their early 40s, CEO Bill Rice Jr. said, and are signing long-term non-compete, non-solicitation pacts in the wake of the transaction.

“We’re effectively betting our careers on this place,” said Rice, who is taking over the chief executive role from his father as part of the transaction.

Anchor’s leaders wanted a buyout because they found it difficult to recycle the small amount of equity they had in the firm under Boston Private’s ownership. When the firm’s leadership recently changed, there was no corresponding change in equity ownership, according to Rice. “That doesn’t work,” he said. Even though the firm liked Boston Private’s executives, he said, it felt it needed a change.

Now, a majority of Anchor’s 50 or so employees own a part of the company, Rice said. Their compensation rides much more on the firm’s success than it did under Boston Private. “We’re no longer working for another master. We’re really working for ourselves and making our own destiny,” he said.

The$47 million deal was financed through three near-equal parts, Rice said: a revenue-sharing agreement with Boston Private worth about $15 million; a five-year loan from Citizens Bank; and cash from Lincoln Peak.

Lincoln Peak plans to be a passive investor, according to Rice. He said Anchor asked Lincoln if it wanted any members on its board, and Lincoln declined.

The employee-ownership shift is one of a few major changes taking place at Anchor. With Rice Jr. becoming CEO while retaining his chief investment officer title, his father, Bill Rice Sr., is now executive chairman. While he’s not necessarily retiring soon, the elder Rice is transitioning operational and portfolio management duties to other employees, his son said. Another employee, Mark Bergen, has become president.

In addition, Anchor’s lease is coming up at its long-time home at One Post Office Square, and it intends to move to Two International Place by the end of the year, Rice said. The 35-year-old firm has also undergone a rebranding.

“This deal, in my mind, was kind of the big, final piece in this big pivot,” he said. “Call it ‘Anchor 2.0.’”

 

This article was originally in the Boston Business Journal and posted here with permission. This publication is for educational purposes only and should not be considered investment advice and does not constitute an offer or solicitation of any kind. To print a copy of this article, click here.