Burgundy Asset Management Ltd., an independent wealth management firm, is being sold to Bank of Montreal for $625 million. Co-founder Tony Arrell stated that the founders initially preferred to pass ownership to colleagues but found it too difficult due to the firm's success. The article argues that two strategic mistakes led to the sale: failing to share ownership early and often, making buyouts expensive, and stubbornly adhering to a value-focused equity investment strategy while rivals diversified into growth stocks and alternative assets.
Opinion: Burgundy founders wanted to stay independent, but they made two mistakes
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TL;DR: Key points with love ❤️Burgundy Asset Management Ltd., an independent wealth management firm, is being sold to Bank of Montreal for $625 million. Co-founder Tony Arrell stated that the founders initially preferred to pass ownership to colleagues but found it too difficult due to the firm's success. The article argues that two strategic mistakes led to the sale: failing to share ownership early and often, making buyouts expensive, and stubbornly adhering to a value-focused equity investment strategy while rivals diversified into growth stocks and alternative assets.
- 1 35 years ago: Burgundy Asset Management was built
- 2 1982: Connor, Clark & Lunn Financial Group Ltd. launched
- 3 2002: CC&L began partnering with smaller fund managers
- 4 Last Thursday: BMO announced the purchase of Burgundy Asset Management; Tony Arrell sent an email to clients
- 5 By the end of the year: Purchase expected to close
- Burgundy Asset Management will lose its independence
- BMO will boost its wealth management business
- Burgundy's financial advisers may start selling BMO's other investment products
- Major wealth-creation event for Tony Arrell and his family foundation
What: Burgundy Asset Management Ltd. is being sold to Bank of Montreal for $625 million.
When: Last week (Tony Arrell's email, BMO announcement), by the end of the year (purchase expected to close).
Where: Bay Street (financial district).
Why: The founders found it difficult to transition ownership to the next generation due to the firm's success and the high cost of buyouts. The firm's narrow investment strategy also limited its growth compared to diversified rivals.
How: Bank of Montreal is acquiring Burgundy Asset Management.