Hightower's Bahnsen Group to buy Hightower Naples, adding about $1.1 billion in client assets

Hightower said on Oct. 6 that The Bahnsen Group, a Hightower company, has agreed to buy Hightower Naples, an affiliated practice, in a transaction expected to close at the end of the year. The parent, a Chicago RIA aggregator overseeing more than $350 billion in assets, said the deal will add about $1.1 billion in assets under management to TBG and complements the practice's existing Palm Beach location. Hightower Naples will operate under the Bahnsen brand, and Hightower says it would be the first existing Hightower advisory practice to join TBG under the firm's flagship franchise model.

Hightower Naples already sits inside Hightower, and so does the buyer. The Bahnsen Group joined the network in 2015, and Hightower agreed in March to buy the franchise outright, closing that deal at the end of last month. Both sides are on the parent's books, which makes the about $1.1 billion a transfer between affiliates rather than a check written by an outside buyer. Sized against the parent, it barely registers: about three-tenths of one percent of Hightower's more than $350 billion. Sized against the buyer, it is closer to a tenth of The Bahnsen Group's existing book.

The franchise receiving the assets has been rebuilt once already. Bahnsen founded The Bahnsen Group in 2015 and joined Hightower that year in a lift-out from Morgan Stanley, arriving with about $600 million in client assets and eight team members. The firm now oversees more than $10.5 billion and employs more than 100 professionals in 13 locations, which Financial Advisor Magazine describes as one of the largest and fastest-growing Hightower franchises. Read the two endpoints against each other and the practice has grown roughly seventeen-fold; adding about $1.1 billion would take the total to about $11.6 billion. One unit note worth keeping straight: the coverage gives the Naples addition in assets under management and TBG's book in client assets, which a practice's own reporting does not always treat as the same number. The coverage also does not split that stretch of growth into market appreciation, recruiting, and acquisition, which is what anyone trying to read a growth rate off the endpoints would need.

The footprint underneath those 13 locations shows how the recruiting was done. Newport Beach and New York City are the flagship offices, with locations in Nashville, Minneapolis, Austin, Phoenix, Dallas, Palm Beach, Bend, Grand Rapids, Silicon Valley, Santa Barbara and Pittsburgh. Naples would give the practice a second Florida office alongside Palm Beach, which Bahnsen called a natural extension of the practice's national footprint in the release.

The practice being sold has its own wirehouse origin. Hightower Naples is led by managing directors and partners David Emma and Mark Masterson, who launched it in 2011 upon joining Hightower from Merrill Lynch, four years before Bahnsen's move. It works with more than 100 families, including business owners, senior executives and professional athletes, according to the release. About $1.1 billion spread across more than 100 households comes to under $11 million apiece, a concentration that suggests retention, not integration, is where the value of this particular book sits.

The consideration is not in the coverage: no cash figure, no notes, no equity, no earnout, and nothing on how the economics of the handoff land for Emma and Masterson. Nor does the coverage say what the flagship franchise model gives a practice that a standard Hightower affiliation does not. That gap is worth marking, because TBG is itself a franchise that Hightower has just agreed to own outright. A parent holding both the buyer and the target can move a billion-dollar book without an outside bidder and without winning a single new client relationship, which is the lowest-friction form of growth available to an aggregator and the one that shows up least in the press release.

Both books were assembled in the wirehouse channel before landing inside the same network. Bahnsen came from Morgan Stanley in 2015; Emma and Masterson came from Merrill Lynch in 2011. What is being shuffled internally now is, in this case, a pair of recruited practices rather than a pair of purchased ones, which is a narrower observation than a thesis but the correct one for a single deal.

Hightower says it expects to announce additional acquisitions into TBG in the coming months, an intention with no targets or sizes attached. Whether the next announcement is another affiliated practice handed to the same franchise, or an outside book bought to feed it, will say more about the flagship model than this transaction can. The Naples deal is expected to close at the end of the year, when the practice takes the Bahnsen name and the next number into TBG arrives with a size attached.