Boston Private Financial Holdings Inc. on Dec. 19 agreed to sell its entire ownership interest in Anchor Capital Advisors LLC to the management team of Anchor for an upfront cash payment and a nonvoting, revenue share participation interest in Anchor.
Expected to close in the first quarter of 2018, the transaction will result in Anchor being majority-owned by members of its management team. A Lincoln Peak Capital Management LLC affiliate will buy a minority interest in Anchor alongside management as part of the deal.
The transaction is subject to obtaining client consents and to Anchor raising debt financing.
At closing, Boston Private will receive cash of about $32 million and future revenue share payments that have a net present value of roughly $15 million, subject to purchase price adjustments.
"This transaction liberates capital for us to reinvest in a more focused company," Boston Private President and CEO Clayton Deutsch said in a press release.
Currently, the Boston-based company estimates that the financial impact of the transaction will result in a noncash pretax charge of about $25 million in the fourth quarter and a tax expense of $11 million to $16 million at closing. The net financial impact will increase Tier 1 common equity by about $30 million to $35 million.
According to the release, Anchor had assets under management of about $9.2 billion as of Sept. 30 and accounted for $24.7 million of revenue in Boston Private's investment management segment, $19.0 million of operating expense and $1 million of noncontrolling interest expense in Boston Private's financial results during the first nine months of 2017. SNL data shows that Boston Private had $8.27 billion in assets as of Sept. 30.
Broadhaven Capital Partners LLC and Goodwin Procter LLP served as Boston Private's financial adviser and legal counsel, respectively, in the transaction. Wilmer Cutler Pickering Hale and Dorr LLP served as legal counsel to Anchor, and Morgan Lewis & Bockius LLP was Lincoln Peak Capital Management's legal counsel.
