Wilmington Trust Co.'s chairman and chief executive officer says his Delaware financial services company will acquire to help expand its wealth management platform.
CEO Ted Cecala said he would look to buy a company that offers family office services for high-net-worth customers. Wilmington Trust wants to acquire sensibly in order to grow steadily despite the difficult market conditions, he said.
"We don't want to acquire just to make ourselves bigger," Mr. Cecala said. "I think, when you expand just to get bigger, all you are doing is diluting your talent. We want to acquire in order to fill out our needs."
Wilmington Trust has grown using this strategy since January 1998 when it bought a stake in Cramer Rosenthal McGlynn, a White Plains, N.Y., value manager with $3.2 billion of assets under management. In July 1998, it acquired a stake in Roxbury Capital Management, a Los Angeles growth manager, also with $3.2 billion of assets under management.
In January 2002, Wilmington bought Balentine & Co., an Atlanta investment counseling firm. A month later it bought a share of Camden Partners, a Baltimore private equity firm with $200 million of committed capital under management.
Mr. Cecala said he hopes any deal will also enhance Wilmington Trust's geographical spread. It has 25 offices in Delaware, four each in Pennsylvania and Florida, two in California, and one each in Georgia, Maryland, New York, London, the Cayman Islands, and the Channel Islands.
Mr. Cecala said Wilmington Trust would like to develop a presence in the Midwest and in the Pacific Northwest to satisfy demand from the attorneys and trust officers it works with. Expanding geographically is not crucial, however, he said.
"We want to develop a critical mass in specific markets," he said. "When we open an office in a new area, we want to be certain that it enhances our overall strategy."
John Fletcher, the head of PriceWaterhouseCoopers' wealth services unit, said many banking companies are expanding their services for the ultra-wealthy.
"In any acquisition a bank has to have the ability to get the systems and the technology right, and they have to carefully consider the brand," he said. "If you buy a high-net-worth adviser with an established brand in a certain market, you have to carefully assimilate."
"Acquiring the right niche firm can be very very profitable," he added, "but acquisitions can fail. Banks have to leverage off of their acquisition. But it is more than just bolting an organization onto yours. Banks have to look strategically at how each acquisition can help them in the long run."
Mr. Cecala said Wilmington Trust examines a lot of potential deals but most of the time "they just don't fit."
Wilmington Trust's assets under management have declined 21%, to $28.9 billion, in the past year. Mr. Cecala said he is very positive, however, about the company's opportunities in wealth management because sales have steadily risen in the past three years.
If Wilmington Trust continues to execute its business strategy, he said, success will come when the markets turn.
"Clients are looking for advice right now, more so than at any time in the past," he said. "Clients … want to find a financial adviser who will help them create the right diversification and reduce the volatility in their portfolio. People want to be successful despite the markets."
