Why CI acquisition will propel Northwood growth plan

Chairman and CEO of leading Canadian multi-family office sees deal as key to next 20 years of success

Why CI acquisition will propel Northwood growth plan

It’s been roughly a week since the news of CI’s impending acquisition of Northwood Family Office, a Toronto-based multi-family office that works with entrepreneurs, senior corporate executives, charitable and family foundations, and other ultra-high-net-worth individuals and households. And according to Northwood’s CEO and chairman, the deal set to close in April marks an important milestone.

“We've had a very successful almost-20 years as the leading multifamily office in Canada,” Tom McCullough said in a recent interview. “And as we look out to the next 20 years, we want it to be similarly successful.”

Northwood’s clients, he says, want the firm to continue serving them in the same way they’ve been doing for generations. As he and his team went about planning for the future, they realized that from a management and leadership standpoint, there was no doubt about the quality of their staff.

But from an ownership perspective, they realized how much they could benefit from having a partner with stable committed capital. They also needed a partner that can provide liquidity for senior partners, can offer equity ownership for the next generation, and was just as keen to grow in the ultra-high-net-worth space as they were.

“We looked at all the options with three stakeholders in mind – clients, staff, and shareholders – and CI came out on top on all categories,” he says.

What initially made CI appealing to Northwood, McCullough says, was the firm’s attitude and culture. In the U.S., CI has acquired more than 25 wealth firms in the U.S., and is essentially giving them the freedom to operate independently with respect to how they serve clients. That approach, in his view, is what has allowed it to grow to the extent it has south of the border.

“Kurt McAlpine, the CEO, has said they specifically don't want to change the fabric of the companies they buy, and don't want to do anything to disrupt the client-centric and entrepreneurial mindset that made them successful,” McCullough says.

While CI leaves its partners to run their business, he says it also brings value to the relationship, and provides long-term supportive capital to invest in the growth of the business. That capability, he says, bolsters CI’s reputation for quality and integrity.

The already considerable contingent of U.S. firms under the CI umbrella, he adds, creates mutually beneficial opportunities. Within that network is a pool of substantial wealth management expertise, including firms that are just as focused on the ultra-high-net-worth segment in the U.S. as Northwood is in Canada, which lends itself to valuable cross-border relationships.

“CI have a lot of respect for the business that we built in Canada and really want us to keep doing what we’re doing,” McCullough said. “They really wanted us to partner and build based on our expertise of working with ultra-high-net-worth clientele in Canada as well as our expertise of wealth management in other parts of the world.”

Northwood’s position among Canada’s leading multi-family offices is backed by a business model it’s built and developed over the past 19 years. It’s that model, McCullough says, that CI wants to build out as it explores the full potential of the space. With roughly 10,000 households in Canada with a net worth of more than $30 million, he sees plenty of room for Northwood to continue growing organically as it has in the past.

“There's just much more potential to grow as more and more people are coming into this category, because businesses are being sold, and wealth is being built,” McCullough says. “Honestly, so many people who are calling me out of the blue asking about joining our family office, which would never have happened five or 10 years ago.”

One challenge to overcome with clients, he says, is the sheer number of firms across the investment, insurance, and other financial industries adding the phrase “family office” to their list of services simply because it lures ultra-high-net-worth business. But eventually, he believes clients will grow to appreciate and look for objective advice, integrated holistic service, cross-discipline expertise, and all the other hallmarks of a true family office.

“There’s not a lot of people offering that in Canada, and it’s confusing for people these days,” McCullough says. “But I think that will work itself out over time, and those of us who are true family offices just have to stay true to the work we do.”