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Globe and Mail
8 hours ago
- Business
- Globe and Mail
Burgundy founders wanted to stay independent, but they made two mistakes
The founders of Burgundy Asset Management Ltd. never wanted to sell the business they built over 35 years to a bank. To his credit, Burgundy chairman and co-founder Tony Arrell admitted as much to clients last week. In an e-mail, he told some of the country's wealthiest families in the country that the founders' first choice would have been to pass their stakes in Burgundy to colleagues. This revelation came as Mr. Arrell unveiled what amounted to his only other option, a $625-million sale to Bank of Montreal BMO-T. 'In large part due to Burgundy's success, we have found it more difficult than expected to transition ownership of Burgundy from the founders and current leadership to the next generation of our people,' Mr. Arrell said in a note sent last Thursday, as BMO announced the purchase. Mr. Arrell and other long-time Burgundy employees made two strategic mistakes that cost the firm its independence, offering lessons in succession to any entrepreneur-owned businesses. Bank of Montreal boosts wealth management business with $625-million Burgundy deal The founders failed to share ownership early and often in their careers, making it increasingly expensive for that next generation to borrow the money needed to buy them out. While Burgundy is private, industry sources said Mr. Arrell, co-founder Richard Rooney, chief executive officer Robert Sankey and a handful of senior executives own the majority of the company. More importantly, Burgundy remained stubbornly committed to a value-focused equity investment strategy that attracted $27-billion in client assets. If this was the ice cream business, Burgundy tried to compete by selling only vanilla when rivals took the Baskin-Robbins approach by offering 31 flavours. Burgundy's mantra is buy great companies for less than they are worth and hold them for the long term. But embracing value investing in recent years meant missing out on growth stocks such as the 'Magnificent Seven' U.S. tech companies that drove market performance. Burgundy also steered clear of alternative assets, such as private equity and private credit, which have become an increasingly significant part of wealthy investors' portfolios. For a sense of what might have been at Burgundy, look at independent asset manager Connor, Clark & Lunn Financial Group Ltd. It started from the same place as Burgundy. The founders – Gerry Connor, John Clark and Larry Lunn – gracefully exited a generation back. CC&L, launched in 1982, lapped its rival by getting succession right and offering a range of stock, bond, real estate and alternative-asset strategies. In 2002, when assets were $14-billion, CC&L began to partner with smaller, specialized fund mangers, paying for ownership by issuing CC&L shares, and keeping teams in place. The firm, now moving to its third generation of owners, oversees $150-billion of assets under 15 brands. CC&L's secret sauce consists of sharing the wealth and embracing a variety of investment approaches. Both ingredients were missing at Burgundy. Once Burgundy is in the BMO family – the purchase is expected to close by the end of the year – its equity funds will be one more flavour on a bank-built menu that puts Baskin-Robbins to shame. BMO's wealth management platform has $423-billion of assets. Over time, this acquisition will pay off for BMO as Burgundy's financial advisers start selling the bank's other investment products to their high-net-worth clients. Succession is never easy to manage in a consolidating asset management industry. Numerous founders cashed in by taking firms public, then enjoyed a second payday by selling to larger players. The principal players at Gluskin Sheff + Associates Inc, Trimark Financial Corp. and Mackenzie Financial Corp. all followed this script. It is no coincidence that families or founders control three publicly-traded fund managers –AGF Management Ltd., IGM Financial Inc. and Fiera Capital Corp. – who have chosen to be diners, not dinner, by acquiring rivals. Burgundy's sale is a major wealth-creation event for Mr. Arrell and his family foundation, but bittersweet. This is an executive who played senior roles at a trio of independent investment banks – Gardiner Watson, Wood Gundy and Midland Walwyn – before starting Burgundy. He spent a 55-year career avoiding working for the banks that now dominate Bay Street. The decision to sell Burgundy to BMO came after 'long study and much discussion‚' Mr. Arrell said in his e-mail to clients. Sharing ownership earlier in Burgundy's evolution and embracing a variety of investment styles could have meant a different conclusion to those discussions.
Yahoo
4 days ago
- Business
- Yahoo
BMO to acquire Burgundy Asset Management for $456m
BMO has agreed to acquire Toronto-headquartered Burgundy Asset Management for approximately C$625m ($456.2m) The acquisition aims to enhance BMO Wealth Management's offerings in the Canadian Investment Counsel space, targeting high-net-worth and ultra-high-net-worth clients. Burgundy, an independent wealth manager, managed around C$27bn in assets as of 31 May 2025. The deal consideration of C$625m will be paid in BMO common shares, with a $125m holdback contingent on Burgundy maintaining certain assets under management 18 months post-closing. It also includes an earn-out element, depending on the fulfilment of future growth targets. The deal is slated for completion by the end of 2025, contingent on regulatory approvals and other standard closing conditions. Upon completion, Burgundy will operate under BMO Wealth Management, remaining under the leadership of its existing CEO, Robert Sankey. Co-founders Tony Arrell and Richard Rooney will continue their roles within the organisation. Established in 1990, Burgundy employs 150 staff members and caters to clients from its offices in Toronto, Vancouver, and Montreal. KMS Capital, Origin Merchant Partners, and PJT Partners were financial advisors to Burgundy, while Torys provided legal counsel. BMO Capital Markets served as BMO's exclusive financial advisor, with Osler, Hoskin & Harcourt acting as legal counsel. BMO Financial Group group head of wealth management Deland Kamanga said: 'Burgundy Asset Management is one of Canada's most respected independent investment managers known for its high calibre team, rigorous investment process and dedicated service to private clients, institutions and family offices. 'The acquisition will build on BMO's heritage as a client-focused wealth manager while expanding our wealth advice and private investment counsel offering.' Burgundy chairman and co-founder Tony Arrell said: 'It has always been our intention to build Burgundy for the long run, so we can serve our clients and their families across generations. 'We are happy to be joining BMO, a North American leader, and believe this is a great opportunity to continue to serve our clients well into the future.' In March 2024, BMO Global Asset Management partnered with Carlyle to offer a globally diversified private equity portfolio, marking its third agreement to increase private markets' availability for Canadian accredited investors. BMO GAM will provide evergreen and closed-end funds to these investors through offering memorandums. "BMO to acquire Burgundy Asset Management for $456m " was originally created and published by Private Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Sign in to access your portfolio
Yahoo
4 days ago
- Business
- Yahoo
BMO to buy wealth manager Burgundy in $456M deal
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. BMO agreed to acquire Toronto-based Burgundy Asset Management in a C$625 million ($456 million) deal expected to close by the end of the year, the institutions announced Thursday. 'In large part due to Burgundy's success, we have found it more difficult than expected to transition ownership of Burgundy from the founders and current leadership to the next generation of our people,' Tony Arrell, a co-founder of the wealth manager, told clients Thursday in a note seen by The Globe and Mail. BMO will hold back C$125 million of the purchase price on the condition that Burgundy maintains a minimum threshold of assets under management for 18 months after the deal closes. Burgundy counted $27 billion in AUM as of May 31. With the acquisition, BMO aims to boost its offerings that cater to high-net-worth and ultra-high-net-worth clients. After the transaction closes, Burgundy – which has 150 employees, along with offices in Toronto, Vancouver and Montreal – will operate as a part of BMO Wealth Management. Burgundy CEO Robert Sankey will continue to run the business. Arrell and fellow co-founder Richard Rooney will also remain with the business, BMO said. "It has always been our intention to build Burgundy for the long run, so we can serve our clients and their families across generations," Arrell said in a press release. 'After long study and much discussion, we ultimately determined that joining BMO, the strongest possible partner, offered the best path forward,' he said in the note to clients. BMO's pending purchase of Burgundy arguably represents a turn toward its home country of Canada as a pillar of growth. Historically, the U.S. has been a target for growth among Canadian lenders, but relations between the two neighbors have soured amid President Donald Trump's return to the White House, subsequent needling on tariffs, and persistent unsolicited comments that Canada should consider joining the U.S. Another Canadian lender, TD, has been trimming its U.S. exposure – though that likely is in response to a $434 billion asset cap regulators have put on the bank's U.S. retail business. The cap came in addition to more than $3 billion in penalties U.S. agencies handed the bank in October over deficiencies found in its money laundering safeguards. TD has since sold a $9 billion residential mortgage portfolio to Bank of America and signaled it would wind down a $3 billion portfolio tied to its U.S. point-of-sale financing business. Otherwise, investment in the U.S. by Canadian lenders has been touted as a source of strength. BMO in 2023 bought San Francisco-based Bank of the West in a $16.3 billion deal. Scotiabank agreed last August to take a nearly 15% stake in Cleveland-based KeyBank. And Royal Bank of Canada last year chose its longtime co-head of U.S. investment banking to serve as the Toronto lender's global head of investment banking – perhaps signaling the importance of the U.S. to the bank overall. As it stands, more than half of Burgundy's institutional client business comes from Canada, while 37% is in the U.S., according to the wealth manager's website. BMO Wealth Management, meanwhile, derived 19% of its net revenue last year from the U.S., according to Bloomberg. The BMO arm counted C$438 billion under management as of April 30. In a note to clients Thursday, Jefferies analyst John Aiken wrote that BMO's 'purchase price of 2.3% of assets under management represents reasonable value to expand [the bank's] high-net-worth client base.' Desjardins Securities analyst Doug Young said the deal aligns with BMO's plan to attain a 15% return on equity in the medium term, saying the price was 'in line with similar past transactions.' In another add-on to the deal, an earn-out component may also be paid depending on whether Burgundy hits certain growth targets. "Burgundy Asset Management is one of Canada's most respected independent investment managers known for its high calibre team, rigorous investment process and dedicated service to private clients, institutions and family offices," Deland Kamanga, group head of wealth management at BMO, said in Thursday's release. "The acquisition will build on BMO's heritage as a client-focused wealth manager while expanding our wealth advice and private investment counsel offering." Sign in to access your portfolio
Cision Canada
5 days ago
- Business
- Cision Canada
BMO to Acquire Burgundy Asset Management Français
Expands BMO's wealth management and financial planning capabilities focused on high-net-worth and ultra-high-net-worth individuals, families and institutions TORONTO, June 19, 2025 /CNW/ - BMO (TSX: BMO) (NYSE:BMO) and Burgundy Asset Management Ltd. today announced the signing of a definitive agreement for BMO to acquire Burgundy Asset Management Ltd. Burgundy is a leading independent wealth manager, providing discretionary investment management for private clients, foundations, endowments, pensions and family offices with approximately $27 billion in assets under management, as of May 31, 2025. The acquisition of Burgundy will be an expansion of BMO Wealth Management and strengthen BMO's offering in the Canadian Investment Counsel space catering to high-net-worth and ultra-high-net-worth clients. BMO was recently recognized for its longstanding commitment to meeting its clients' unique needs, being named Canada's Best Private Bank for Ultra-High-Net-Worth clients according to the Euromoney Private Banking Awards. The transaction is expected to close by the end of calendar 2025, subject to customary closing conditions including regulatory approvals. BMO will acquire Burgundy for a purchase price of approximately $625 million, payable in BMO common shares, including a $125 million holdback to be paid subject to Burgundy maintaining certain assets under management 18 months post-closing. An earn-out component may also be paid in the future based on the achievement of certain growth targets. "Burgundy Asset Management is one of Canada's most respected independent investment managers known for its high calibre team, rigorous investment process and dedicated service to private clients, institutions and family offices," said Deland Kamanga, Group Head, Wealth Management, BMO Financial Group. "The acquisition will build on BMO's heritage as a client-focused wealth manager while expanding our wealth advice and private investment counsel offering." Upon closing, Burgundy will operate as part of BMO Wealth Management and Burgundy's Chief Executive Officer, Robert Sankey, will continue to lead the business. Burgundy Co-Founders Tony Arrell and Richard Rooney will also remain with the business. "It has always been our intention to build Burgundy for the long run, so we can serve our clients and their families across generations," said Tony Arrell, Chairman and Co-Founder, Burgundy Asset Management Ltd. "We are happy to be joining BMO, a North American leader, and believe this is a great opportunity to continue to serve our clients well into the future." Founded in 1990, Burgundy's 150 employees serve clients from offices in Toronto, Vancouver and Montreal. KMS Capital, Origin Merchant Partners and PJT Partners acted as financial advisors to Burgundy on the transaction. Torys LLP acted as legal counsel. BMO Capital Markets acted as exclusive financial advisor to BMO on the transaction. Osler, Hoskin & Harcourt LLP acted as legal counsel. Caution Regarding Forward-Looking Statements Certain statements in this press release are forward-looking statements. All such statements are made pursuant to the "safe harbor" provisions of, and are intended to be forward-looking statements under, the United States Private Securities Litigation Reform Act of 1995 and any applicable Canadian securities legislation. Forward-looking statements in this press release may include, but are not limited to: statements with respect to the expected closing of the proposed transaction, potential payment of an earn-out, plans for the integration of Burgundy Asset Management Ltd., our strategies or future actions, our targets and commitments, the regulatory environment in which we operate, the results of, or outlook for, our operations, and include statements made by our management. Forward-looking statements are typically identified by words such as "will", "expect" and "may" or negative or grammatical variations thereof. By their nature, forward-looking statements require us to make assumptions and are subject to inherent risks and uncertainties, both general and specific in nature. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that our assumptions may not be correct, and that actual results may differ materially from such predictions, forecasts, conclusions or projections. We caution readers of this press release not to place undue reliance on our forward-looking statements, as a number of factors – many of which are beyond our control and the effects of which can be difficult to predict – could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. The future outcomes that relate to forward-looking statements may be influenced by many factors, including, but not limited to: the possibility that the proposed transaction does not close when expected or at all because required regulatory approvals and other conditions to closing are not received or satisfied on a timely basis or at all or are received subject to adverse conditions or requirements; the anticipated benefits from the proposed transaction are not realized in the time frame anticipated or at all as a result of changes in general economic and market conditions, laws and regulations and their enforcement, and the degree of competition in the business areas in which Burgundy Asset Management Ltd. operates; the business of Burgundy Asset Management Ltd. may not perform as expected or in a manner consistent with historical performance; the ability to promptly and effectively integrate Burgundy Asset Management Ltd.; diversion of management time on transaction-related issues; our ability to successfully implement various initiatives under expected time frames and the compliance of various third parties with our policies and procedures and legal requirements; and those other factors discussed in the Risks That May Affect Future Results section, and the sections related to credit and counterparty, market, insurance, liquidity and funding, operational non-financial, legal and regulatory, strategic, environmental and social, and reputation risk, in the Enterprise-Wide Risk Management section of BMO's 2024 Annual Report, and the Risk Management section in BMO's Second Quarter 2025 Report to Shareholders, all of which outline certain key factors and risks that may affect our future results and our ability to anticipate and effectively manage risks arising from all of the foregoing factors. We caution that the foregoing list is not exhaustive of all possible factors. Other factors and risks could adversely affect our results. Investors and others should carefully consider these factors and risks, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements. We do not undertake to update any forward-looking statements, whether written or oral, that may be made from time to time by the organization or on its behalf, except as required by law. The forward-looking information contained in this press release is presented for the purpose of assisting shareholders and analysts in understanding the proposed transaction and may not be appropriate for other purposes. About Burgundy Asset Management Burgundy Asset Management Ltd. is a global investment management firm headquartered in Toronto, with additional offices in Montreal and Vancouver. Since its founding in 1990, Burgundy has been dedicated to serving high-net-worth individuals, foundations, endowments, pensions, and family offices. The firm is known for its disciplined quality/value investment approach, focused on protecting and compounding clients' capital over the long term. As of May 31, 2025, Burgundy had approximately $27 billion in assets under management. About BMO Financial Group BMO Financial Group is the seventh largest bank in North America by assets, with total assets of $1.4 trillion as of April 30, 2025. Serving customers for 200 years and counting, BMO is a diverse team of highly engaged employees providing a broad range of personal and commercial banking, wealth management, global markets and investment banking products and services to 13 million customers across Canada, the United States, and in select markets globally. Driven by a single purpose, to Boldly Grow the Good in business and life, BMO is committed to driving positive change in the world, and making progress for a thriving economy, sustainable future, and inclusive society.
Hamilton Spectator
5 days ago
- Business
- Hamilton Spectator
BMO Financial Group to buy Burgundy Asset Management for $625 million
TORONTO - BMO Financial Group has signed a deal to buy Burgundy Asset Management Ltd. for $625 million in shares. Burgundy provides discretionary investment management for private clients, foundations, endowments, pensions and family offices. It had about $27 billion in assets under management as of May 31. Under the deal, Burgundy will operate as part of BMO Wealth Management. Burgundy chief executive Robert Sankey will continue to lead the business, while Burgundy co-founders Tony Arrell and Richard Rooney will also remain. The transaction is expected to close by the end of the year, subject to customary closing conditions including regulatory approvals. This report by The Canadian Press was first published June 19, 2025. Companies in this story: (TSX:BMO)
