News
May 01, 2003
Company Adds Small-Cap Value Investment Expertise
BOSTON, May 2 /PRNewswire-FirstCall/ Boston Private Financial Holdings, Inc. (Nasdaq: BPFH) today announced it has signed a definitive agreement to acquire an 80% interest in Dalton, Greiner, Hartman, Maher & Co. (DGHM) of New York, NY. DGHM, founded in 1990 and managing approximately $2.2 billion of client assets, is a value style manager specializing in small-cap equities. The remaining 20% interest in the firm will be retained by members of the DGHM management team. This transaction is expected to be immediately accretive on a cash basis to BPFH and accretive on a GAAP basis within the first 12-month period. The transaction's initial purchase price is expected to be approximately $75 million, with approximately 91% payable in cash, but the total purchase price could change as it is contingent upon the contracts transferred and operating results through a five-year earn-out period. The transaction is expected to close in the third quarter of 2003, and is subject to several conditions, including regulatory approvals.
With over 20 years of successful small cap investing, DGHM is a value-driven investment manager that utilizes a disciplined approach to purchase stocks with above average profitability, at attractive valuations. The firm's primary product offerings include mid-cap value, small-cap value and micro-cap value. It also manages three specialty products: ValueTech (a value approach to technology stocks), UltraValue (a highly concentrated value portfolio), and Enhanced Value (a long/short hedge fund). DGHM's institutional clients are among the most sophisticated in the plan sponsor community including American Express, University of Toronto, New Hampshire Retirement System, Emerson, and the W.K. Kellogg Foundation. With eight investment professionals holding a CFA Charter and averaging 20 years or more of experience, the firm has achieved significantly positive inception-to-date excess returns for its products.
Timothy L. Vaill, Boston Private's Chairman and Chief Executive Officer, in outlining the specific purpose for this transaction, said, "The acquisition of DGHM expands our wealth management business into one of the most attractive areas of the country. This distinguished and noteworthy firm represents a continuation of our product development strategy and will provide a foundation for growing our asset management business in the New York Metro region. Finally, DGHM adds to our top line diversification by bringing recurring fees as a percentage of total revenues up to 53%. As stock market valuations return to their historical norms, and as we continue to pursue the growth expected in the capital markets over the long-term, it is important for Boston Private to be represented in all elements of the investment management spectrum. I couldn't be more pleased."
Boston Private Financial Holdings currently has six operating companies which focus on investment management, private banking and financial planning in two regions; New England and Northern California. The Company also has a minority investment in a seventh company in the Pacific Northwest. The DGHM acquisition will expand the firm's presence to a fourth region, the tri-state region centered around Manhattan. The Company's client base consists of selected institutions, non-profits and foundations, and high net worth individuals.
Timothy G. Dalton, Jr., Chairman and Chief Investment Officer of DGHM said, "Our affiliation with Boston Private will provide an excellent opportunity for us to grow our existing investment business and to increase our high net worth market presence. We view a partnership with Boston Private as an excellent way to achieve success in both the institutional and wealth management businesses, and we are committed to leading these efforts in the newly established New York Region."
"Boston Private is impressed with DGHM's investment track record in the value sector and their well-earned reputation among institutional investors," said C. Michael Hazard, Vice Chairman of Boston Private Financial Holdings. "DGHM also has a strong history of developing innovative products which we hope will benefit our existing affiliate network. Finally," he added, "the acquisition of DGHM now gives Boston Private extraordinary expertise in small and mid-cap securities for both the growth and value investing styles."
Kenneth J. Greiner, Chief Executive Officer and Director of DGHM's Management Committee said, "We view this partnership as a significant opportunity for our next generation of investment managers to break new ground for the firm, and to expand and diversify our client base. We are delighted to become a part of Boston Private's network of excellence." Mr. Vaill concluded, "DGHM is an important part of Boston Private's plan to replicate our successful wealth management approach in geographic areas with attractive demographics. The New York Metro region is one of the most important markets in the world. Over time, we hope to establish additional capabilities in banking, investing and financial planning in New York City and its environs."
Walter M. Pressey, Boston Private's President and Chief Financial Officer, noted, "DGHM has demonstrated success at developing and launching innovative products. Our performance goals for the firm will be identical to those for our other businesses -- 15% compound annual growth in earnings over a five year period -- and we are confident the DGHM team can achieve that goal."
Preceding press release obtained from Boston Private Financial Holdings at www.bostonprivate.com. Berkshire Capital has reprinted this press release substantially in its entirety.
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