Testimonial: RIA Growth Through Continued Partnership - with Chris Boehm

Adam Farag: Hello everyone. I got Chris Boehm of Cresset Partners here with us today. Going to go through a little Q&A. We've worked with Cresset here and I've worked with Chris Boehm for a couple years now, so wanted to get an interview out here. We're going to ask a few questions. So I'm going to start with the easy one, just tell us a little bit about yourself, Chris, and Cresset, and go from there.

Chris Boehm: Sure. Thanks, Adam. Happy to be with you today. I'm Chris Boehm. As you mentioned, I am involved in both aspects of our overall Cresset business. I'm managing partner for our private capital business, which is our direct private equity investing platform, and I also lead all of our strategic and corporate development efforts for Cresset Asset Management, which is our RIA and multifamily office service platform, which has obviously been the basis for our relationship with Oak Street, and where we've worked together. We've consummated three acquisitions into that business over the last couple of years. I lead both of those efforts and play a broader role from a leadership perspective across all of Cresset. I would describe as a large multifamily office platform. We are, as I mentioned, actively involved in serving clients. Today, approximately$ 10 billion of client AUM in wealth management, RIA, family office service business, and in parallel with that, separately but associated with that, we operate a series of direct investing, private investment platforms, both private equity, as well as real estate and some other associated asset classes, including private equity secondaries. So, we are building out a multifaceted platform focused on working with families to provide families access to very sophisticated investment management, family office services, as well as access to institutional- quality longterm private investments.

Adam Farag: Got it. Good deal. When you guys got started, which was three or four years ago now, I think three something, what was really the longterm vision?

Chris Boehm: There's a few aspects I'd speak to. One, it was indeed a longterm vision. We have aspirations to build what we like to refer to as a hundred year business, and the intention is for this platform to be permanent, we've permanently capitalized the firm, and think about strategy and growth opportunities with a very longterm time horizon in mind, as we think that is relatively unique and differentiated in this market relative to other firms that are perhaps backed by institutional capital and operating on shorter time horizons, investment horizons. So, very much a longterm orientation. Over that time horizon, as I mentioned earlier, partnering with families, working with families who themselves, their time horizons are quite long, so we think that alignment is very powerful, and the intention was to build a multifaceted platform working with those families, providing services, helping educate their next generation, deal with transition issues, estate and planning issues, tax issues, all of the complexities that families of wealth face and need to deal with, and in doing so, create something we think is really unique to differentiate, and works with those families in a way that there really aren't any other solutions, at least we didn't believe were out there at the time, and we started down the path. So, we aspired to build that into a very large enterprise and a lasting and sustaining enterprise with a longterm time horizon in mind.

Adam Farag: One question that I've been really excited as we were doing this whole thing that I've been excited to ask you guys just in the space, growth is a really big thing right now in the RIA space. Everybody's growing, people are acquiring, but you guys are up to $9 or $10 billion of AUM in three years. That's exciting.

Chris Boehm: Right, very much so.

Adam Farag: When you planned, how did you plan to get to that big that quick, and really jump onto the scene in the RIA space?

Chris Boehm: We've all along thought about our growth strategy in a few different channels, if you will, for lack of a better term. One, recruitment, two, organic recruitment of teams, largely out of private bank settings, which to date has been the primary growth driver from an organic perspective, and have had quite a bit of success in that area, and that's been the primary driver from an organic standpoint, along with leveraging just the broader network of our founders on our team, our advisory board, et cetera, all of whom have really played a part in creating this broad ecosystem that has supported very substantial organic growth. Then the intention would be to pair that with two other growth strategies, one being ultimately over time identifying culturally compatible teams in a more traditional lift out context, where there's a fit from a cultural perspective, where there's a fit from a client perspective. That is not to date been as high a priority for us, but certainly would remain open to the right types of situations there over time. Then thirdly, where our relationship with Oak Street has come to bear, is targeted, very thoughtful acquisitions and other partnerships with existing independent RIAs, where we feel like the right strategic fit exists or the right cultural fit exists, where the principles of those other firms are looking to accomplish the same things we are, similarly longterm time horizon, and we feel like coming together could really be additive to help them serve their clients better, help them create the right longterm development and career opportunities for their team, and at the same time help accelerate our growth strategy. So, view this is multifaceted, and we feel very fortunate we've been able to be successful across the board where, importantly, acquisitions are an important part of that, but they're not the overall strategy, in contrast to other strategies out there that are largely acquisitive and more quote unquote roll- ups, which we don't consider ourselves to be.

Adam Farag: Great. Good stuff there. Now a little bit easier one, hear about Oak Street?

Chris Boehm: How did we hear about Oak Street? A couple different referrals as we were getting started and really ramping the business back two plus years ago at this point, as we were starting to actively look for the first acquisition opportunity that we thought inaudible would be excited to add onto the platform. We had built relationships with various advisors, lawyers, and others, consultants, et cetera around the sector, and part of my duties fell on me to identify who the right players were from a financing perspective, and we were referred through both our outside counsel at the time, he's now our in- house legal team, a woman named Noelle Goodrow, who had worked with Oak Street on previous financings and had terrific things to say. So, came with strong endorsements, so was pleased to meet Rick and you and Kirsten and others and build a relationship.

Adam Farag: Yeah, I remember on our first call thinking," Wow, this is a great way to go into a relationship, getting referred by multiple people." I think was in the same week, wasn't it?

Chris Boehm: It was, that's right.

Adam Farag: With that, what made you decide to use Oak Street as a strategic partner for acquisition capital?

Chris Boehm: I think a few elements. Ultimately, telling you something you don't know, but as we got to know you and the team better, it became clear that this was very much a strategic market for you, this was a core longterm growth focus for Oak Street in terms of building a leadership position in the RIA sector. So, that depth of knowledge, experience, understanding of the business, understanding of how to think about these businesses, how to underwrite them, and a genuine longterm strategic commitment to building a business and growing were all really critical from our standpoint, versus much less- informed capital that would've undermined our confidence in your ability to ultimately deliver. You had demonstrated a strong commitment and an investment in the space, knew the space, and gave us confidence you would be able to be a partner with us, both with the initial transaction which we pursued in late 2018, but importantly, given our growth aspirations, that you had equally ambitious growth aspirations over time and we could grow together.

Adam Farag: Perfect. Yeah, it's been a great couple years watching you guys grow, and I'm really glad that we got the chance to get working with you as early as we did. Is there an example that you can think of where you felt Oak Street went above and beyond to deliver for your organization?

Chris Boehm: Sure, there are many along the way. This is required on both parts, a vision of a longterm partnership and growing together, and staying committed to that along the way. No financing's ever easy, no partnership is ever easy to consummate and grow, but we've managed to. Most recently and most notably, we very substantially expanded our relationship with Oak Street in terms of the size of our financing facility, worked closely together to bring in a terrific new partner as well in that expanded facility, which itself is obviously never an easy thing to do, there's always complications involved, but we managed to do that successfully here in the first or second quarters of 2020, in the face of incredibly unusual times, in the face of global pandemic. Enormous market correction occurred during the underwriting process, yet in the face of all that and through all that, you and our other partner remained committed to getting this done and ultimately delivered, which we're tremendously grateful for. But the ultimate testament, as I said earlier, to your commitment to the sector for the longterm and belief in the longterm vision for what we're doing.

Adam Farag: Got it. Thank you for saying that. It was definitely a ride getting through to getting this second deal done, but glad we were all working together to have the same vision. Moving past this acquisition and onto the future, how do you see our relationship impacting the business in future?

Chris Boehm: Continue to be very positive. As I mentioned earlier, we expect and tend to remain acquisitive and continue to, in a smart, targeted way, complete additional strategic partnerships with other firms that we think make sense, and having a strong and growing financing partner alongside of us to accomplish that's going to be, obviously, critical. So, our expectation is to continue to grow very significantly with acquisitions as part of that, and we are excited about having you as our partner to move forward and continue to do that.

Adam Farag: Thanks for taking the time today to tell us about the relationship.

Chris Boehm: Happy to do it, and again, very much appreciative of all the support and partnership. We're excited for what the future holds.