1 / 306

Lee Summer: The Holding Company for a Family of Wealth Managers

Lee Summer: The Holding Company for a Family of Wealth Managers. Tiburon Research May 12, 2015. Lee Summer. Comments. Founded in 1987 Founded as Sanders, Morris, & Mundy Founded by Dan Sanders, Ben Morris, & John Mundy Based in Houston, TX 9 firms 6 states 10 offices 152 employees

krystald
Download Presentation

Lee Summer: The Holding Company for a Family of Wealth Managers

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Lee Summer:The Holding Company for a Family of Wealth Managers Tiburon Research May 12, 2015

  2. Lee Summer Comments • Founded in 1987 • Founded as Sanders, Morris, & Mundy • Founded by Dan Sanders, Ben Morris, & John Mundy • Based in Houston, TX • 9 firms • 6 states • 10 offices • 152 employees • 1,000 clients • $8.4 billion assets under management • Web sites: www.globalhou.com, www.smhca.com, www.cummermoyers.com, www.kissingernet.com, www.leonettiassoc.com, www.rikooncarret.com, www.miller-green.com, www.isgca.net, www.capitolmanagementgroup.org, www.signethealthcarepartners.com, & www.selectsportsgroup.com Source: 5/18/11 Answers.Com Web Site; 5/18/11 Funding Universe Web Site; 4/14/11 Edelman Financial Services Presentation (Edelman); 11/29/10 Sanders Morris Harris Group Press Release; 5/25/01 Houston Business Journal; 2/11/00 Houston Business Journal;Tiburon Research & Analysis

  3. Lee Summer was Founded as Pinnacle Global Group in 1987 and Has Subsequently Evolved through its Sanders, Morris, & Mundy, Pinnacle Global Group & Sanders Morris Harris Group, The Edelman Financial Group, & Affiliated Wealth Partners Phases Sanders, Morris, & Mundy Phase Pinnacle Global Group & Sanders Morris Harris Group Phase The Edelman Financial Group Phase Affiliated Wealth Partners Phase Lee Summer History Sanders, Morris, & Mundy Founded Affiliated Wealth Partners Today Approximate Dates: 1982 – 1987 1988 - 1999 2000 - 2004 2005 - 2014 2015 2015 Key Steps: • 1982: Leonetti & Associates founded • 1984: Miller-Green Financial Services founded • 1987: Sanders, Morris, & Mundy founded • 1987: The Rikoon Group founded • 1994: Harris, Webb, & Garrison founded • 1994: Pinnacle Management & Trust Company founded • 1994: Global Financial Services founded • 1994: George Ball joined Sanders, Morris, & Mundy as chairman • 1996: Sanders, Morris, & Mundy acquired Williams, MacKay, Jordan, & Company • 1996: Crest Advisors founded • 1998: Pinnacle Global Group founded • 2000: Pinnacle Global Group acquired Sanders, Morris, & Mundy • 2000: Pinnacle Global Group acquired Blackford Securities • 2000: Pinnacle Global Group acquired Cummer Moyers Financial Services • 2001: Pinnacle Global Group changed its name to Sanders Morris Harris Group • 2001: Sanders Morris Harris Group acquired Kissinger Financial Services • 2001: Investor Solutions Group of California founded • 2002: Sanders Morris Harris Group acquired Sutro & Company’s institutional sales team • 2003: Sanders Morris Harris Group merged its Pinnacle Management & Trust Company into Salient Partners and ended up with a 50% stake in Salient Partners & 23% stake in its affiliate Endowment Advisers • 2004: Sanders Morris Harris Group acquired Crest Advisors • 2005: Sanders Morris Harris Group acquired a 51% stake in Edelman Financial Services • 2007: Sanders Morris Harris Group wrote down high yield hedge fund investment (SMH Credit Opportunity Fund) and increased loan loss reserves • 2007: Sanders Morris Harris Group acquired 80% stake in The Rikoon Group • 2007: Sanders Morris Group acquired a 50.1% stake in The Dickenson Group • 2008: Sanders Morris Harris Group increased its stake in Edelman Financial Services to 76% • 2008: Sanders Morris Harris Group acquired a 50.1% stake in Leonetti & Associates • 2008: Sanders Morris Harris Group acquired Miller-Green Financial Services • 2008: Sanders Morris Harris Group sold its 50% stake in Salient Partners & its 23% stake in its affiliated Endowment Advisers • 2008: Leonetti & Associates ranked as one of 150 best financial advisors for doctors by Medical Economics • 2009: Spun-off Sanders Morris Harris Group capital markets business • 2010: Spun-off in Concept Capital while retaining 44% profits interest • 2010: Acquired 50.1% stake in Global Financial Services • 2011: Changed name to The Edelman Financial Group • 2011: Changed NASDAQ ticker from SMHG to EF • 2011: Ric Edelman named co-CEO with George Ball • 2011: Closed independent broker/dealer business SMH Capital Partners • 2011: Acquired additional 25% stake in Global Financial Services to push ownership to 75% • 2011: Acquired additional 30% stake in Leonetti & Associates to push ownership to 80.1% • 2011: Steve Cordill resigned • 2012: Went private by selling stake to Lee Equity Partners • 2012: George Ball became chairman and Ric Edelman became sole CEO • 2012 Moved headquarters from Houston, TX to Fairfax, VA • 2012: Sold Sanders Morris Harris retail brokerage offices (excluding Don Sanders’ business) to Wunderlich Securities • 2012: Disposed of proprietary funds business and related investments • 2012: Sold half of investment in Proton Therapy Center • 2012: Disposed of investment in Selected Sports Group • 2013: Changed name of Investor Solutions Group of California to Investor Financial Solutions and employees became employees of Edelman Financial Services • 2014: Leonetti & Associates listed in 300 top RIA firms by the Financial Times • 2014: Changed name to Pinnacle Summer Investments • 2014: Leonetti & Associates listed in 300 top RIA firms by the Financial Times • 2015: Put Edelman Financial Services into separate business Source: 9/23/14 Securities & Exchange Commission Web Site; 5/12/14 Think Advisor Web Site; 4/6/14 Barron’s; 7/22/13 Securities & Exchange Commission Web Site; 7/8/13 Barron’s; 6/24/13 The Edelman Financial Group Email (Edelman); 6/8/13 Lee Equity Partners Email (Gormley); 9/5/12 The Edelman Financial Group Email (Edelman); 5/24/12 Google News Alerts; Tiburon Research & Analysis

  4. Lee Summer’s Leonetti & Associates was Founded by Michael Leonetti in 1982 Comments • Founded in 1982 • Founded by Michael Leonetti • Based in Buffalo Grove, IL • CEO: Michael Leonetti Source: 3/5/08 SMH Group Press Release; Tiburon Research & Analysis

  5. Lee Summer’s Miller-Green Financial Services was Founded in 1984 Comments • Founded in 1984 • Founded by Bert Miller • Based in The Woodlands, TX • CEO: Bert Miller Who was Green? Source: 5/17/11 Miller-Green Financial Services Web Site; 4/21/08 SMH Group Press Release; Tiburon Research & Analysis

  6. Lee Summer’s Predecessor Sanders, Morris, & Mundy was Founded by Don Sanders, Ben Morris, & John Mundy in 1987 Comments • Founded in 1987 • Founded by Don Sanders, Ben Morris, & John Mundy Provided corporate equity financing and money management services to wealthy clientele Served as underwriter on IPOs Private equity placement firm Source: 5/18/11 Funding Universe Web Site; 5/25/01 Houston Business Journal; 2/11/00 Houston Business Journal; Tiburon Research & Analysis

  7. Lee Summer’s The Rikoon Group was Founded by Robert Rikoon in 1987 Comments • Founded in 1987 • Founded by Robert Rikoon • Based in Santa Fe, NM • CEO: Robert Rikoon Source: 5/17/11 Rikoon Group Web Site; Tiburon Research & Analysis

  8. Lee Summer’s Predecessor Harris, Webb, & Garrison was Founded by Titus Harris, Rit Webb, & Bob Garrison in 1994 Comments • Founded in 1994 • Founded by Titus Harris, Rit Webb, & Bob Garrison • Based in Houston, TX Harris later became name partner in SMH Group Source: 5/18/11 Funding Universe Web Site; 10/01/01 The Daily Deal; 5/25/01 Houston Business Journal; 2/11/00 Houston Business Journal; Tiburon Research & Analysis

  9. Lee Summer’s Predecessor Pinnacle Management & Trust Company was Founded by Robert Garrison in 1994 Comments • Founded in 1994 • Founded by Robert Garrison Source: 5/18/11 Funding Universe Web Site; Tiburon Research & Analysis

  10. Lee Summer’s Global Financial Services was Founded by Robert Benjamin, Gerardo Chapa, & Ricardo Perusquia in 1994 Comments • Founded in 1994 • Founded by Robert Benjamin, Gerardo Chapa, & Ricardo Perusquia • Based in Houston, TX • Co-CEOs: Robert Benjamin, Gerardo Chapa, & Ricardo Perusquia • Web site: www.globalhou.com Source: 5/18/11 Funding Universe Web Site; 5/17/11 Sanders Morris Harris Web Site; 5/13/11 Cummer Moyers Web Site; 4/14/11 Edelman Financial Services Presentation (Edelman); 12/9/10 RIA Biz; 11/29/10 On Wall Street; 11/29/10 Sanders Morris Harris Group Press Release; 11/29/10 Reuters; 10/31/10 Sanders Morris Harris Group Web Site; 8/31/09 RIA Biz; 3/08 Registered Rep; 4/23/07 Barron’s (The Winner’s Circle); Tiburon Research & Analysis

  11. Lee Summer’s Predecessors Sanders, Morris, & Mundy Had Acquired Several Investment Banks, Starting with Williams, MacKay, Jordan, & Company in 1996 Sanders, Morris, & Mundy Investment Bank Acquisitions Williams, MacKay, Jordan, & Company -- -- -- • -- • -- • -- • Based in Houston, TX • Acquired by Sanders, Morris, & Mundy in 1996 • Added institutional brokerage and public company research services Source: 5/18/11 Funding Universe Web Site; 4/23/04 Houston Chronicle; 5/1/02 Buyside; 2/11/00 Houston Business Journal; Tiburon Research & Analysis

  12. Lee Summer’s Predecessor Crest Advisors was Founded in 1996 Comments • Founded in 1996 • Based in New York, NY Source: 5/18/11 Funding Universe Web Site; 4/23/04 Houston Chronicle; Tiburon Research & Analysis

  13. Lee Summer’s Predecessor Pinnacle Global Group was Founded by the Merger of Five Companies, Including Harris, Webb, & Garrison and Pinnacle Management & Trust Company in 1998 TEI was a publicly held environmental services company that sold its assets before the merger Pinnacle Global Group Founding Firms Pinnacle Global Group Capital (PGG Capital) Pinnacle Management & Trust Company Harris, Webb, & Garrison Spires Financial TEI • Founded in 1994 • Founded by Robert Garrison • Later merged into Salient Partners • Later became SMH Capital • -- • -- • Founded in 1994 • Founded by Titus Harris, Rit Webb, & Bob Garrison • Based in Houston, TX • Titus Harris became Chairman & Bob Garrison became CEO of Pinnacle Global Group • Rit Webb continued as Executive Vice President Source: 3/15/12 The Edelman Financial Group 10K Report; 5/18/11 Funding Universe Web Site; 10/1/01 The Daily Deal; 2/11/00 Houston Business Journal; Tiburon Research & Analysis

  14. Lee Summer’s Predecessor the Pinnacle Global Group Acquired Sanders, Morris, & Mundy in 2000 Comments • Founded in 1987 • Founded by Don Sanders, Ben Morris, & John Mundy • Chairman: George Ball • CEO: Ben Morris • Acquired in 2000 • Paid $40.0 million (paid with 7.1 million new shares) (each firm owned 50% of the resulting firm) • Pinnacle Global Group especially wanted the acquired business Williams, MacKay, Jordan, & Company • Merged Sanders, Morris, & Mundy into Harris, Webb, & Garrison to form Sanders Morris Harris • Titus Harris remained Chairman and Bob Garrison remained CEO of Pinnacle Global Group • Don Sanders became Vice Chairman of Pinnacle Global Group and Chairman of the executive committee of Sanders Morris Harris • George Ball became Chairman of Sanders Morris Harris • Ben Morris became CEO of Sanders Morris Harris • Rit Webb continued as Executive Vice President Institutional sales & research team covering 150 southwest companies 2000? George Ball orchestrated this merger Source: 3/15/12 The Edelman Financial Group 10K Report; 5/18/11 Funding Universe Web Site; 10/1/01 The Daily Deal; 5/25/01 Houston Business Journal; 2/11/00 Houston Business Journal; Tiburon Research & Analysis

  15. Lee Summer’s Predecessors Pinnacle Global Group & Sanders Morris Harris Group Had Acquired Several Investment Banks, Including Blackford Securities in 2000 (Page 1) Pinnacle Global Group & Sanders Morris Harris Group Investment Bank Acquisitions Sutro & Company (Institutional Sales Team) Blackford Securities Concept Capital Markets Crest Advisors • Based in Garden City, NY • Acquired by Pinnacle Global Group in 2000 • Merged with Sanders Morris Harris • Added prime brokerage capability • Blackford Asset Management later became SMH Asset Management • Based in Los Angeles, CA • 23 employees • Acquired by Sanders Morris Harris Group in 2002 • Won bidding contest • Added offices in Los Angeles, CA & New York, NY • Allowed movement into new research sectors, including entertainment, media, satellites, & wireless • Founded in 1996 • Based in New York, NY • Acquired by Sanders Morris Harris Group in 2004 • Brought focus on the telecommunications, media, & technology sectors • -- Source: 5/18/11 Funding Universe Web Site; 4/23/04 Houston Chronicle; 5/1/02 Buyside; 2/11/00 Houston Business Journal; Tiburon Research & Analysis

  16. Sanders Morris Harris Group Investment Bank Acquisitions (Page 2) Sanders Morris Harris Group Investment Bank Acquisitions -- -- -- -- • -- • -- • -- • -- Source: Tiburon Research & Analysis

  17. Lee Summer’s Predecessors Pinnacle Global Group & Sanders Morris Harris Group Has Acquired at Least Two Investment Management Firms, Including Cummer Moyers Financial Services in 2000 Pinnacle Global Group & Sanders Morris Harris Group Investment Management Firm Acquisitions Salient Partners & Endowment Advisers Cummer Moyers Financial Services -- -- • Based in Fort Worth and Weatherford, TX • Acquired by Pinnacle Global Group in 2000 • Later renamed SMH Capital Advisors • $670 million assets under management • Sanders Morris Harris Group merged its Pinnacle Management & Trust Company into Salient Partners and ended up with a 50% stake in Salient Partners & 23% stake in its affiliate Endowment Advisers in 2003 • Paid $16 million • Raised Sanders Morris Harris assets under management to $5.2 billion • -- • -- Source: 5/8/11 Investing Universe Web Site; 11/10/08 Sanders, Morris, Harris Group Press Release; 9/2/08 Sanders, Morris, Harris Group Press Release; 5/25/01 Houston Business Journal; Tiburon Research & Analysis

  18. Lee Summer’s Predecessor Pinnacle Global Group Changed its Name to Sanders Morris Harris Group in 2001 Roots in private equity Comments • Founded in 1999 • Founded as Pinnacle Global Group • Chairman: George Ball • CEO: Bob Garrison • Changed name to Sanders Morris Harris Group in 2001 • Sought to differentiate itself from other firms with the name Pinnacle • Sanders Morris Harris had been the most well known of all the businesses operating under the Pinnacle Global Group umbrella • Changed stock ticker from PING to SMHG • Rebranded subsidiaries (Blackford Asset Management became SMH Asset Management; PGG Capital became SMH Capital; and Cummer Moyers became SMH Capital Advisors) Source: 6/8/11 Sanders Morris Harris Group Brochure; 5/18/11 Funding Universe Web Site; 10/1/01 The Daily Deal; 6/1/01 High Beam Business Website; 5/25/01 Houston Business Journal; Tiburon Research & Analysis

  19. Lee Summer’s its Predecessor Sanders Morris Harris Group Had Acquired Several Fee-Based Financial Advisors, Starting with Kissinger Financial Services in 2001 and Including 76% of Edelman Financial Services in 2005 (Page 1) SMH Group Fee-Based Financial Advisor Acquisitions Edelman Financial Services (The Edelman Financial Center) Kissinger Financial Services The Rikoon Group The Dickenson Group • Founded in XXXX • Based in Hunt Valley, MD • $300 million assets under management • $2.4 million revenues • Sanders Morris Harris Group acquired in 2001 • Came shortly after Pinnacle Global Group had rebranded itself Sanders Morris Harris • Kissinger Financial Services retained its name • Founded in 1987 • Founded by Ric Edelman • Based in Fairfax, VA • CEO: Ric Edelman • Sanders Morris Harris Group acquired 51% stake in 2005 • Paid $100 million (largest transaction to date) • Objective was to help Edelman Financial Services grow nationally • Raised stake to 76% in 2008 • Founded in 1987 • Founded by Robert Rikoon • Based in Santa Fe, NM • CEO: Robert Rikoon • Web site: www.rikooncarret.com • Acquired 80% stake in 2007 • Allowed to monetize the value of business and gain access to investment banking deals • Acquired additional 20.0% stake to push ownership to 100% in 2011 • Incremental stake acquired by Summer Holdings II • Founded in XXXX • Based in Solon, OH • 11 employees • Acquired 50.1% in 2007 • Four individuals also awarded put options at fair market value (paid out over four years) Source: 5/12/14 Think Advisor Web Site; 4/12 Financial Advisor Magazine; 6/20/11 RIA Biz; 5/18/11 Funding Universe Web Site; 5/17/11 Reuters; 5/17/11 Sanders Morris Harris Web Site; 5/13/11 Cummer Moyers Web Site; 5/13/11 Kissinger Financial Services Web Site; 4/14/11 Edelman Financial Services Presentation (Edelman); 12/9/10 RIA Biz; 11/29/10 On Wall Street; 11/29/10 Sanders Morris Harris Group Press Release; Tiburon Research & Analysis

  20. SMH Group Fee-Based Financial Advisor Acquisitions (Page 2) SMH Group Fee-Based Financial Advisor Acquisitions Miller-Green Financial Services Leonetti & Associates Global Financial Services Investor Solutions Group • Founded in 1982 • Founded by Michael Leonetti • Based in Buffalo Grove, IL • 12 employees • $400.0 million assets under management • CEO: Michael Leonetti • Web site: www.leonettiassoc.com • Acquired 50.1% in 2008 • Allowed Leonetti & Associates to monetize the value of business and gain access to investment banking deals • Acquired additional 30% stake to push ownership to 80.1% in 2011 • Incremental stake acquired directly by Summer Holdings I • One individual also granted put option at 8.0x EBITDA to be paid over four years • Founded in 1984 • Founded by Bert Miller • Based in The Woodlands, TX • $400 million assets under management • CEO: Bert Miller • Web site: www.miller-green.com • Acquired in 2008 • Previously had been SMH Partners affiliate • Founded in 1994 • Founded by Robert Benjamin, Gerardo Chapa, & Ricardo Perusquia • Based in Houston, TX • $4.1 billion assets under management • Co-CEOs: Robert Benjamin, Gerardo Chapa, & Ricardo Perusquia • Web site: www.globalhou.com • Sanders Morris Harris Group acquired 50.1% stake in 2010 (more precisely, SMH Group acquired a 48.7% capital interest & 50.1% profits interest in Global Financial Services (its broker/dealer) and a 50.1% capital & profits interest in GFS Advisors (its RIA)) • Boosted assets under management by 33% to $16.0 billion • Boosted earnings by 10% • Principals retained remaining 49.9% ownership stake • Acquired additional 25% stake to push ownership to 75.0% in 2011 • Three individuals also granted put options at 6.0x EBITDA plus $1.0 million • Founded in XXXX • Based in Huntington Beach, CA • Web site: www.isgca.net • Acquired in XXXX Source: 3/15/12 The Edelman Financial Group 10K Report; 6/21/11 Rikoon Group Web Site; 6/21/11 Alacra Store.Com Web Site; 6/15/11 Leonetti & Associates Web Site; 5/17/11 Rikoon Group Web Site; 4/4/11 Edelman Financial Services Presentation (Edelman); 5/17/11 Sanders Morris Harris Web Site; 1/14/11 Reuters; 11/29/10 Google News Alerts; Tiburon Research & Analysis

  21. SMH Group Fee-Based Financial Advisor Acquisitions (Page 3) SMH Group Fee-Based Financial Advisor Acquisitions -- Capitol Management Group -- -- • -- • Based in Houston, TX • Web site: www.capitolmanagementgroup.org • -- • -- Source: 6/21/11 Alacra Store.Com Web Site; 5/17/11 Miller-Green Financial Services Web Site; 5/17/11 Sanders Morris Harris Web Site; 5/17/11 Investor Solutions Group Web Site; 4/4/11 Edelman Financial Services Presentation (Edelman); 5/9/08 SMH Group Press Release; 4/21/08 SMH Group Press Release; Tiburon Research & Analysis

  22. Lee Summer’s Predecessor Sanders Morris Harris Group Wrote Down the Value of its High Yield Hedge Fund Investment (SMH Credit Opportunity Fund) and Increased its Loan Loss Reserves by $5.0 Million in 2007 Turmoil in the debt markets Comments Price declines in bonds held by hedge fund • -- Loan loss form investment banking related loan commitments Source: 11/10/08 Sanders, Morris, Harris Group Press Release; 5/9/08 SMH Group Press Release; 2/27/08 SMH Group Press Release; Tiburon Research & Analysis

  23. Lee Summer and its Predecessor Sanders Morris Harris Group Has Divested at Least One Investment Management Firm, Including its 50% Stake in Salient Partners & its 23% Stake in its Affiliated Endowment Advisers in 2008 Lee Summer Investment Management Firm Divestitures Salient Partners & Endowment Advisers -- -- -- • -- • -- • -- • Sanders Morris Harris Group acquired 50% stake in Salient Partners & 23% stake in its affiliate Endowment Advisers in 2003 • Paid $16 million • Sold to management in 2008 • Buyers had held option to acquire • Sold for $95 million (to be paid greater of $12 million or 23% of all distributions per year until reaches $85 million plus 6% interest plus a $9 million note for its interest in Salient Partners payable over five years with interest) • Realized gain of $30.1 million • Set up special purpose vehicle called SMH Speadr to hold the notes • Special purpose vehicle dissolved in 2013 upon agreement • Agreed to continue to make Salient Partners investment products available to Sanders, Morris, Harris Group clients Source: 11/10/08 Sanders Morris Harris Group Press Release; 9/2/08 Sanders Morris Harris Group Press Release; Tiburon Research & Analysis

  24. Lee Summer’s Leonetti & Associates Has Won Many Awards, Including Being Named as One of the 150 Best Financial Advisors for Doctors by Medical Economics in 2008 Leonetti & Associates Awards & Recognition Medical Economics Financial Times -- -- • 2008: Named one of the best 150 financial advisors for doctors • 2014: Listed as one of 300 top RIAs • -- • -- Source: 6/15/11 Leonetti & Associates Web Site; Tiburon Research & Analysis

  25. Lee Summer & its Predecessor SMH Group Have Exited Several Investment Banking Businesses, Including the Spin-Off its Sanders Morris Harris Capital Markets Business in 2009 Repositioned its business in 2009-2011 by exiting capital markets & investment banking and concentrating on wealth management & asset management (earnings are more predictable; Wall Street more highly valued) SMH Group & Lee Summer Investment Banking Firm Divestitures Sanders Morris Harris Capital Markets (Fixed Income & Institutional Equity Trading Business) -- -- Concept Capital • CEO: William Sprague • Sold capital markets business to Madison Williams Capital in 2009 • Excluded Concept Capital & The Juda Group • Temporary acquisition company Siwanoy Capital was formed by the senior management of the businesses and Pan Asia China Commerce Corporation (PAC3) • Ultimately brought in second financial partner as well • Ultimately renamed Madison, Williams, & Company • Sanders, Morris, Harris Group received $2.7 million cash and an $8.0 million note • Sanders, Morris, Harris Group also retained a 17.5% interest in the business subject to PAC3 and the other financial partner having options to purchase that interest for $4.0 million (one option was exercised in 2011 for $1.2 million reducing The Edelman Financial Group’s stake to 12.25%; the second option remains outstanding) • Transformed Sanders, Morris, Harris Group almost entirely into a wealth & asset management company • Based in Garden City, NY • CEO: Bob Moore • Web site: www.conceptcapital.com • Sold in 2010 • SMH Group entered into agreement with the principals of Concept Capital business to contribute certain of the assets, properties, & other rights pertaining to Concept, including the prime brokerage, research & capital markets, fund accounting & administration, and research library businesses to newly formed Concept Capital Markets & Concept Capital Administration • Concept Capital Holdings (Concept Capital) sold its own Washington Research Group just prior to the transaction • Received $5.3 million note (SMH purchased from Concept Capital Holding a $1.2 million note on March 1, 2010 and another note equivalent to 50% of the sum of its cash on December 31, 2010) • Sanders, Morris, Harris Group retained 24% capital interest & 44% profits interest in Concept Capital Holdings • -- • -- Concept Capital: Prime brokerage business Source: 3/15/12 The Edelman Financial Group 10K Report; 5/17/11 Reuters; 5/10/11 Sanders Morris Harris Group Press Release; 5/10/11 The Edelman Financial Group Conversation (Edelman); 1/14/11 Reuters; 11/14/11 Sanders Morris Harris Group Press Release; 1/23/12 Traders Magazine; 8/27/09 Small Cap World Web Site; 1/22/09 Sanders Morris Harris Group Press Release; Tiburon Research & Analysis

  26. Lee Summer’s Edelman Financial Services Began a National Expansion Plan into Major Markets in 2009 Began by opening six offices in the New York, NY metropolitan area Comments Branding is strong in Chicago, Detroit, San Francisco, & Miami • -- Source: 5/12/14 Think Advisor Web Site;10/21/09 RIA Biz; 8/31/09 RIA Biz; Tiburon Research & Analysis

  27. Lee Summer’s Predecessor Sanders Morris Harris Group Took on its Current Name in 2011 House of brands was ineffective Conducted study through Opinion Research Corporation (2,000 consumers) Comments • -- Edelman Financial Services brand was better known than the Sanders Morris Harris Group brand Future advertising budget was to focus on Edelman Financial Services brand Institutional investors prefer well-known brands New name underscores management transition Other advisors (Cubbit Jacobs and Prosek Communications) supported the change Became first publicly traded advisory firm All subsidiaries required to reprint letterhead Source: 6/20/11 RIA Biz; 5/18/11 Answers.Com Web Site; 5/17/11 Reuters; 4/11/11 RIA Biz; 3/15/11 Barron’s;Tiburon Research & Analysis

  28. Lee Summer Changed its NASDAQ Ticker from SMHG to EF in 2011 Reflects name change Comments Short tickers are prestigious • -- Source: 9/13/12 Street Insider.Com Web Site; Tiburon Research & Analysis

  29. Lee Summer Closed is its Independent Broker/Dealer Business Called SMH Partners Group in 2011 Financial Advisors: Carlyle Wealth Management; DH Financial Services; Equity Concepts; Equity Concepts North; Investment Associates; McMaken Financial Services; Outlook Financial Group; Seltzer Financial; Solley Financial Services; Solutions Group; Victory Financial ; Wellspring Financial Comments • 12 financial advisor clients Independent broker/dealer reps = partners Marketed under own brand names Provided support in operations, marketing, custody & clearing, compliance, information technology, accounting & payroll, human resources, & employee benefits Criticized “big box” = broker/dealers Source: 10/12/11 Advisors 4 Advisors Web Site; 10/11/11 PR Web; 10/11/11 Think Advisor; 6/8/11 Sanders Morris Harris Group Brochure: 5/16/11 The Edelman Financial Group Conversation (Edelman); 5/16/11 Edelman Financial Services Presentation (Edelman); 4/4/11 Edelman Financial Services Presentation (Edelman); Tiburon Research & Analysis

  30. Lee Summer went Private by Selling a Stake to Lee Equity Partners in 2012 Agreed 4/16/12 Comments Closed 9/20/12 • -- Paid $258-$267 million ($8.85 per share) Paid 43% premium (private equity firms willing to pay well for large financial advisory firms) Held go shop period 95% approval vote (74% excluding management & Lee Equity Partners) Summer Holdings II (Delaware corporation) (and Summer Merger Sub (Texas corporation)) Other investors included Ric Edelman, executive team members, & minority investors sourced by Lee Equity Partners Mark Gormley & Ben Hochberg Source: 5/12/14 Think Advisor Web Site; 7/11/13 Google Web Site; 7/8/13 Barron’s; 6/18/13 Lee Equity Partners Email (Gormley); 9/14/12 Houston Business Journal; 9/13/12 Sacramento Bee; 9/13/12 Street Insider.Com Web Site; 9/13/12 The Edelman Financial Group Press Release; 7/17/12 The Edelman Financial Group Form 8k; Tiburon Research & Analysis

  31. Lee Summer Moved its Corporate Headquarters from Houston, TX to Fairfax, VA in 2012 No expected job losses in Houston, TX Comments Tax & other issues needed to be studied • -- Source: Tiburon Research & Analysis

  32. Lee Summer Sold Sanders Morris Harris’ Retail Brokerage Business (Excluding Don Sanders Business) to Wunderlich Securities in 2012 Comments • 4 offices • 20 financial advisors • 500 clients • $3.6 billion assets under administration • $20.0 million revenues • $0.4 million net profits Source: 5/16/11 The Edelman Financial Group Conversation (Edelman); 4/14/11 Edelman Financial Services Presentation (Edelman); 4/8/11 Google News Alerts; Tiburon Research & Analysis

  33. Lee Summer Disposed of its Proprietary Funds Business & Related Investments in 2012 Comments • -- Source: Tiburon Research & Analysis

  34. Lee Summer Sold Half of its Investment in Proton Therapy Center in 2012 Comments • -- Source: Tiburon Research & Analysis

  35. Lee Summer Disposed of its Investment in Select Sports Group in 2012 Comments • -- Source: Tiburon Research & Analysis

  36. Lee Summer’s Investor Solutions Group of California Changed its Name to Investor Financial Solutions and its Employees Became Employees of Edelman Financial Services in 2013 Comments • -- Source: 5/17/11 Investor Solutions Group Web Site; 4/14/11 Edelman Financial Services Presentation (Edelman); Tiburon Research & Analysis

  37. Lee Summer Changed its Name to Pinnacle Summer Investments in 2014 Comments • -- Source: Tiburon Research & Analysis

  38. Lee Summer Put Edelman Financial Services into a Separate Business in 2015 Comments • -- Source: Tiburon Research & Analysis

  39. Lee Summer Has an Advertising Strategy Advertising Comments • -- Source: Tiburon Research & Analysis

  40. Lee Summer’s Leonetti & Associates’ Tag Line is Similar to that of Other Leading Fee-Based Financial Advisors Leonetti & Associates Tag Line “Fee-only private financial advisors” Source: 6/15/11 Leonetti & Associates Web Site; Tiburon Research & Analysis

  41. Lee Summer May Not Have a Web Site Lee Summer Web Site Lee Summer Web Site -- -- -- -- -- Source: Tiburon Research & Analysis

  42. Lee Summer is Planning Additional Acquisitions Acquisitions Comments Targeting $500 million to $10 billion assets under management firms • -- Plans to take advantage of recent economic turmoil Has cash & stock to do acquisitions Prices still realistic Negotiating with firms with $1.1 billion assets under management in 4/12 Source: 4/12 Financial Advisor Magazine; 4/14/11 Edelman Financial Services Presentation (Edelman); 10/21/11 RIA Biz; 3/25/11 RIA Biz; Tiburon Research & Analysis

  43. Lee Summer Has a Charitable Giving Program Charitable Giving Comments • -- Source: Tiburon Research & Analysis

  44. Lee Summer Includes Nine Firms, Up from Seven in 2008 2013 = 11/7/13 Lee Summer Firms Source: 5/18/11 Answers.Com Web Site; 5/17/11 Reuters Web Site; 5/16/11 The Edelman Financial Group Conversation (Edelman); 11/29/10 Sanders Morris Harris Group Press Release; 1/22/09 Sanders Morris Harris Group Press Release;11/15/07 SMH Group Press Release; Tiburon Research & Analysis

  45. Lee Summer Has Offices in at Least Six States Needs update Lee Summer States CA; IL; MD; NM; OH; TX Prior to the separation of Edelman Financial Services Lee Summer had offices in 21 states in 2012 (2007 – 21; 2008 – 21; 2010 – 20; 2011 – 25); 2012 = 9/13/12 Source: 9/13/12 The Edelman Financial Group Press Release; 5/18/11 Answers.Com Web Site;5/17/11 Investor Solutions Group Web Site;5/17/11 Sanders Morris Harris Web Site;5/17/11 Miller-Green Financial Services Web Site;5/17/11 Rikoon Group Web Site;5/17/11 Leonetti & Associates Web Site;5/17/11 Capitol Management Group Web Site;5/17/11 Reuters Web Site; 5/13/11 Kissinger Financial Services Web Site;Tiburon Research & Analysis

  46. Lee Summer Has at Least Ten Offices Needs update Lee Summer Offices Prior to the separation of Edelman Financial Services Lee Summer had 41 offices in 2011 Source: 5/18/11 Answers.Com Web Site;5/17/11 Investor Solutions Group Web Site;5/17/11 Sanders Morris Harris Web Site;5/17/11 Miller-Green Financial Services Web Site;5/17/11 Rikoon Group Web Site;5/17/11 Leonetti & Associates Web Site;5/17/11 Capitol Management Group Web Site;5/17/11 Reuters Web Site; 5/13/11 Kissinger Financial Services Web Site;4/26/11 Edelman Financial Services Email (Edelman);Tiburon Research & Analysis

  47. Lee Summer Has 152 Employees, Up Nearly 100% Since 2011 But Steady Since 2014 2015 = 3/31/15 Lee Summer Employees 2011 is estimate Prior to the separation of Edelman Financial Services Lee Summer Had 502 employees in 2012 (2003 – 317; 2007 – 610; 2010 – 540; 2011 – 530); 2012 = 9/14/12; sold Salient Partners in 2008?; Source: 9/14/12 Houston Business Journal; 4/12 Financial Advisor Magazine;5/18/11 Answers.Com Web Site; 5/18/11 Funding Universe Web Site;5/17/11 Investor Solutions Group Web Site;5/17/11 Sanders Morris Harris Web Site;5/17/11 Miller-Green Financial Services Web Site;5/17/11 Rikoon Group Web Site;5/17/11 Leonetti & Associates Web Site;5/17/11 Capitol Management Group Web Site;Tiburon Research & Analysis

  48. Lee Summer Serve 1,000 Clients Needs update Lee Summer Clients Estimate Prior to the separation of Edelman Financial Services Lee Summer served 20,000 clients in 2013 (2010 – 14,200; 2011 – 17,000; 2012 – 17,000); 2012 & 2013: Edelman Financial Services only; 2011 total = 17,000 (15,000 = EFS) (estimate) Source: 5/2/12 The Edelman Financial Group Press Release; 6/20/11 RIA Biz; 5/18/11 Answers.Com Web Site; 4/26/11 Edelman Financial Services Email (Edelman); 4/14/11 Edelman Financial Services Presentation (Edelman); Tiburon Research & Analysis

  49. Lee Summer Has Gathered Accounts Needs data Prior to the separation of Edelman Financial Services Lee Summer had 29,000 accounts in 2010 Lee Summer Accounts Source: 10/21/10 RIA Biz; Tiburon Research & Analysis

  50. Lee Summer Has Gathered Net New Accounts Needs data Lee Summer Net New Accounts Source: Tiburon Research & Analysis

More Related