A bold move in the world of finance has just taken place, and it's a game-changer for the industry. Steward Partners, an innovative employee-owned advisory firm, has secured a massive $475 million investment from Ares Management, a leading alternative asset manager.
This deal is a testament to the success and potential of Steward Partners, which manages an impressive $50 billion in client assets. But here's where it gets interesting: the investment comes in the form of a non-controlling minority stake, and it's not just about the money.
The capital infusion benefits multiple stakeholders. It rewards the employee-owners of Steward, including advisors and support staff, who will now have an even greater stake in the company, with their equity expanding to over 50%. This move truly empowers those who make the business thrive daily.
Hy Saporta, co-founder and COO, emphasizes, "It brings the returns back to the people running and working in the business." This unique structure sets Steward apart and ensures a motivated and invested workforce.
And this is the part most people miss: the investment also involves a roll-over of equity by existing minority interest holders, The Cynosure Group and the Pritzker Organization. Keith Taylor, a managing director at Cynosure, will become the new chairman of Steward's board, replacing founder Michael McMahon, who is retiring.
Jim Gold, co-founder and CEO of Steward, highlights McMahon's pivotal role in building the brand from its humble beginnings. "Mike nominated Keith as his successor, and we're thrilled to have Keith's wisdom guiding us into the next chapter," Gold said.
Ares, already a lender to Steward, will continue supporting the firm's M&A and recruiting activities with an expanded credit facility. This comes after a record year for Steward, which closed 14 deals, and the firm aims to generate $60 million in acquired revenue by 2026.
The CEO emphasizes, "We wanted to do it the right way." This deal is a validation of Steward's unique value proposition and its commitment to its employees.
Steward's journey began with a 1099 independent contractor model, but about three years ago, it transitioned to a W-2 integration model for future hires. Today, it boasts 628 partners, 301 advisors, and 80 offices across the U.S., along with its own broker/dealer, Steward Partners Investment Solutions.
Keith Taylor of Cynosure expresses his firm's belief in the RIA space and particularly in Steward's employee-owned model. "We wanted to keep employee ownership growing. As evidenced by my accepting the chairman role, there's a lot of work and potential here," he said.
This deal is a win-win, benefiting all parties involved and showcasing the power of employee ownership. It's a controversial topic: should employees have a greater stake in the companies they work for? What are your thoughts? Feel free to share your opinions in the comments below!
