A group led by money manager Todd Morgan, who handles some of L.A.'s wealthiest and most famous people, is buying back the firm that was sold off to State Street Corp. four years ago.
The purchase price for Bel Air Investment Advisors LLC was not disclosed, but it is believed to be a fraction of the $220 million that the group's 75 percent stake sold for in 2001.
Rumors of the deal have been growing since State Street, the Boston-based financial services firm, said last year that it would write down between $150 million and $170 million of its stake in Bel Air. The firm manages $3.7 billion in assets for a roster of big-name clients that include Barbra Streisand, Sylvester Stallone, Geraldo Rivera and Lee Iacocca.
Though State Street had ambitious plans to expand Bel Air's presence nationwide, the stock market downturn and lackluster performance halted its growth and forced the company to abandon its strategy. That also opened the door for competitors to poach a handful of Bel Air's wealthy clients, who now number 265.
Morgan would not discuss details of the transaction except to say that the deal is expected to close in June.
"It was a good deal for them at the time and it was a great deal for us to buy it back at an attractive price," he said. "They decided to sell it and take a loss. They didn't want to be in our business anymore."
The purchase by Bel Air's management highlights how market conditions have shifted since the late 1990s, when large financial institutions coveted asset management firms during the height of the bull market. Many big deals have since been unwound, proving how tough it can be for large companies to maintain a soft touch in such an ego-driven business.
Building a roster
Morgan spent six years building the high-net worth advisory business of Goldman Sachs & Co. in Los Angeles, but left in 1997 to form Bel Air. He took several Goldman veterans with him, including his brother, Thomas Morgan, a former senior vice president at Lazard Asset Management in New York.
When Bel Air sold the 75 percent stake to State Street four years ago, competitors in Los Angeles jumped at the opportunity to steal the firm's clients. Several local wealth managers said poor returns forced a few of Bel Air's clients to leave.
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