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“The Future Is Now” FA Magazine Interviews Lido CEO, Jason Ozur

Published 08-17-2021

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“Los Angeles firm Lido Advisors is one of those firms seeking to make strategic acquisitions, and in May the firm announced it had partnered with Charlesbank Capital Partners, a middle-market private investment firm, in pursuit of growth. “We don’t buy companies, we buy people,” says Lido’s chief executive officer, Jason Ozur. “So bringing in a strategic partner like Charlesbank will enable us to go upstream in our human capital acquisition strategy… We are their first entry into the wealth management arena.” Lido, based in Century City, has 13 offices across the country in states like Arizona, Florida, California, Texas and New York.

There is fee compression in the industry, Ozur says. “The cost of running a company, and the cost of compliance and accounting and marketing … and analysts—those costs are going up, which is making it much harder for firms to maintain those types of cost structures. Which is why you’re seeing a lot of M&A.” The average age of the execs (in the 60s) is likely also fomenting this trend. Ozur says the average age of the partners at Lido is closer to the mid-40s.

The firm came out of the family office space with a strength in alternative investments, but it has lowered its client minimums and is adding things like estate planning and financial planning and tax planning expertise. The firm is considering adding an insurance component as well. “We are definitely moving more to a full-service model than perhaps five years ago,” he says.

Lido made a handful of acquisitions of firms or individuals in 2020, including a firm called Quantum Capital Management and a bond team. Lido had been self-funding these up to now, before it partnered with Charlesbank.

Ozur says the pandemic likely scared a lot of advisors into wanting to sell their firms, because if they’ve lived through the financial crisis and then the pandemic, they don’t want to lose the opportunity to get their liquidity event. But he says that if firms aren’t growing, they are going to be less attractive acquisition targets.

“You see firms that try to value themselves on a multiple of EBITDA and they come to you with margins of 70%, which is unreasonable and not sustainable, and so you take a 70% margin and then you try to do a multiple of EBITDA, the price becomes ridiculous when you look at it on a multiple of revenue,” Ozur says.”

ERIC RASMUSSEN, FA Magazine