How Michael Tiedemann built on his father’s legacy to forge a global firm | Citywire
By Ian Wenik | November 17, 2021
After overcoming his father's distaste for deals, the Tiedemann Advisors CEO is taking his $22bn RIA in a dramatic new direction.
The reminders are there for Michael Tiedemann every day.
At the front entrance of $22bn Tiedemann Advisors’ midtown Manhattan offices, a black easel holds an oil painting of his late father, Carl Tiedemann.
Every time Michael steps off the elevator onto the 26th floor of 520 Madison Avenue, he has the opportunity to ask himself a simple question: How far have I come?
‘My father was a real optimist. Like, a true, genuine, unrelenting optimist. He was a business builder and he was a leader,’ Tiedemann said. ‘I’ve tried to take as much of those traits forward as possible.’
His journey has now taken him to the brink of one of the most ambitious deals in the history of the wealth management industry.
Carl Tiedemann, who died in 2016, is best known in financial services circles as the former chairman and president of investment bank Donaldson, Lufkin & Jenrette, which merged with Credit Suisse in 2000. He founded his own alternative asset manager, Tiedemann Investment Group, in 1980 when he exited the president role at DLJ.
Michael Tiedemann joined his father’s firm in 1992 but left just two years later, looking to make his own name as an equity research analyst at Banco Garantia.
‘I learned to take risks. I learned to go where I was very much on my own and I had to sort it out,’ said Tiedemann, who lived in Brazil during a period of hyperinflation so bad that savvy shoppers looking for food would target shelves in the rear of the supermarket that had outdated prices.
‘I happened to be extraordinarily lucky in that the bank that hired me was one of the greatest collections of financial minds in emerging markets, certainly in Brazil,’ he added.
Credit Suisse acquired Banco Garantia in 1998, and in 2000, Tiedemann returned to the fold – albeit carefully. He joined Tiedemann Advisors, which was a new entity originally conceived of as a trust company (the company now functions as a multi-family office).
‘I was very concerned about nepotism and had very little interest in being plugged into a pre-existing successful business as the son of a founder,’ Tiedemann said. ‘Being there on day one when we had zero revenue, zero marketing materials – nothing, we had absolutely nothing – was important just for my own sense of credibility.’
Tiedemann Advisors grew through spheres of influence, with word-of-mouth referrals from lawyers and accounting firms helping the firm grow. Yet as the business matured, Tiedemann did not quite feel fully in charge.
‘I would say, despite my father never wanting to cast a shadow, that it probably took me 15 years before I really realized that I could make decisions for the business that were driven by my own thinking, with a lot of influence from my partners and the conversations we’d have, that maybe were contrary to my father’s thinking,’ Tiedemann said.
Case in point: the firm’s first steps into the M&A market. In 2016, with $4.9bn in assets under management to its name at the time, Tiedemann Advisors merged with Presidio Capital Advisors, a San Francisco-based RIA with about $4bn in assets under management.
A year later, Tiedemann Advisors acquired $3.4bn Threshold Group, a Seattle-based firm with an emphasis on socially-conscious investing. Threshold would become the backbone of Tiedemann Advisors’ ESG investing-based initiatives.
Carl Tiedemann, Michael said, loathed dealmaking: ‘My father was not a fan of M&A activity, in any form or shape.’
The Presidio merger closed in September 2016, a few months after Carl’s death at age 89.
The younger Tiedemann has not lost his taste for making bold deals. Tiedemann Advisors is in the process of merging with Alvarium Group, a London-based money manager, and then going public through a combination with SPAC Cartesian Growth Corp. Tiedemann will serve as chief executive of the combined company, which will adopt the moniker of Alvarium Tiedemann Holdings.
The transaction, which is set to close in the first quarter of 2022, values the combined firm at $1.4bn. Alvarium Tiedemann Holdings will become one of the few publicly-traded companies in the RIA space.
Tiedemann’s deal embraces a structure that most general interest readers had never heard of until a surge of interest in 2020 and early 2021. SPACs, which essentially serve as blank-check companies tasked with finding an M&A partner, have raised $500bn from investors over the last two years, although data from SPAC Alpha indicates 80% are still looking for a deal.
‘The bloom was off the rose in terms of the SPAC structure, and I actually saw that as a positive,’ Tiedemann said. ‘We’re not doing this deal because it is a SPAC structure. The SPAC structure enables us to use the time while we’re going through the regulatory process to be integrating, creating growth synergies and all the things that we want to do as a business as opposed to spending the time on a roadshow, hoping we can pull off an IPO in six months.’
The combined company stands to oversee about $54bn in assets.
Why look abroad for a merger partner? Tiedemann has taken steps onto foreign soil before: In 2019, it opened for business in Switzerland via a partnership with consultancy Constantia Partners. In July, Tiedemann Constantia announced that it is buying London-based multi-family-office Holbein Partners, subject to regulatory approval.
‘Without that global presence… I would have been less likely to do the Alvarium deal because I would have had less understanding of the opportunity set,’ Tiedemann said.
‘I would say we’re contrarian,’ he added. ‘Everyone’s coming into the states, and we’re going off the shores of the US. Just like we were the only equity-equity deal in 2016, we brought in impact investing in 2017 before it totally exploded, we’ll end up being one of the first movers of a large-scale US firm going non-US.’
Tiedemann estimated that negotiations on the transaction took a total of five quarters. Eighty partners across Tiedemann, Alvarium, and Cartesian are rolling 98% of their equity into the combined business.
If Tiedemann is nervous about the high-stakes transaction, it doesn’t show.
‘It takes selling to a private equity manager off the table. It removes succession as an inevitable issue at some point,’ Tiedemann said of the deal. ‘It creates a global firm.’
Keeping the company’s stakeholders involved for the long run is a page out of Carl Tiedemann’s playbook.
‘He expended as much energy on the entry-level person as he did on the most senior partner and he did it all the time. It generated a great work environment. In an industry with a lot of turnover, it generated a lot of loyalty among the ranks as well as an example of how to treat other people in the organization,’ Tiedemann said. ‘I’ve very much tried to continue that.’
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