Houston-based financial service co. sees partner firms off for $95m payout. Sanders Morris Harris (SMH) is selling its stakes in Salient Partners and Endowment Advisers, manager of the Endowment Fund back to the firms for a total of $95 million.

SMH owns 50% of Houston-based Salient, a private-client investment advisory that managed more than $2 billion as of early May 2008, and 23% of Endowment Advisers, which manages about $3.3 billion, according to its latest ADV filing with the SEC.

Looking back

The buy-back option was built into the agreement made when SMH took stakes in Salient Partners and Endowment Advisers in 2003.

The new agreement calls for Endowment Advisers to pay SMH the greater of $12 million or 23% of total distributions yearly until SMH has pulled in $86 million (plus 6% per annum). For its stake in Salient, SMH gets a $9-million note payable (with interest) over five years.

SMH acquired its stakes in Salient and Endowment Advisers, a related entity, for $1.75 million in cash along with the possibility of an extra $250,000 in cash and up to 1.2 million shares of SMH if the combination of Salient and SMH's Pinnacle Management & Trust, a state-chartered trust and investment management company SMH subsequently merged with Salient, should "exceed specified performance levels," according to SMH's 12 November 2003 10-Q filing with the SEC.

Today 1.2 million shares in SMH would be worth about $12.9 million, up a bit from their value through the last half of 2003. And back when it did its 2003 with SMH, Salient had $670 million in assets under management.

SMH has acquired five firms over the past 16 months, among them Miller-Green Financial, a 25-year-old Houston-based wealth-management firm, Solon, Ohio-based insurance product and retirement consultancy Dickenson & Associates and New York-based iPro One, an investment-platform provider to CPAs.

Houston-based SMH provides asset- and wealth-management services investment banking, institutional brokerage, trading and research. It manages about $11 billion in client assets. -FWR

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