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Financial district in Toronto.Mark Blinch/The Globe and Mail

Dundee Corp. is planning on moving from being a seller of wealth management assets to a buyer, with executives making it clear that acquisitions are in the cards.

Toronto-based Dundee has lofty ambitions of growing assets under administration (AUA) at Goodman & Company, Investment Counsel Inc., its high-net-worth subsidiary, more than fivefold to $1-billion. Its current AUA is $176-million.

"To move the needle the way we want to move it, we think an acquisition is the best way to go," David Goodman, Dundee's chief executive officer, said in a conference call with analysts earlier this month. The firm is looking at doing "small tuck-in" acquisitions and "something more substantial," he said.

In an interview, executive vice-president Richard McIntyre said the firm won't rush into a deal. Finding the right assets that are a good fit is paramount, he said.

"This is a bit of a numbers game where you have to go out there and do your due diligence and do your research, and dare I say do a bit of dating," Mr. McIntyre said.

"If there's compatibility there, it takes two to tango," he added.

Norman Levine, managing director and partner with Toronto-based Portfolio Management Corp. which has $530-million under management, says Dundee's strategy to buy makes sense if its goal is to grow quickly.

"There's two ways of growing: The way we've grown – bringing in new business, which is a great way … because it doesn't cost anything. But it takes time," Mr. Levine said. "The other way is to buy it. You get big by acquisition. That costs you money."

Mr. Levine says Goodman & Company will have no shortage of targets in Canada, be it buying companies outright or simply acquiring books of business.

"There's lots of guys like me out there that own small investment counselling firms wondering what I'm going to do when I retire," Mr. Levine said.

"Places like a Goodman are going to want to buy your books from you. And maybe have you stay a year or two for transition. It's a logical exit for a lot of people in my business," he added.

For the record, Mr. Levine said Portfolio Management Corp. has no interest in selling to Goodman & Company, or anyone else, any time soon.

Earlier this year, Dundee jettisoned its retail wealth management arm, Dundee Goodman Private Wealth. The division, which had around $3.5-billion in AUA, was sold to Echelon Wealth Partners Inc. for $13.5-million, which represents a valuation of approximately 0.4 per cent of assets. If Dundee ends up buying a high-net-worth asset manager, it will likely pay a significantly higher valuation.

Investment counselling firms typically sell for between 2 and 3 per cent of assets, David Baskin, president of Toronto-based Baskin Wealth Management, said in an interview. Valuations can be higher or lower depending on a number of factors.

Asset managers with a small number of clients with large accounts usually sell for more than firms with a large number of clients with smaller accounts (the overhead is lower). Meantime, wealth managers that offer hedge funds, such as Gluskin Sheff + Associates Inc., trade for loftier valuations because they generate higher fees than traditional asset managers.

On paper, Baskin Wealth, which has $950-million under management in high-net-worth assets, looks like the kind of business Goodman & Company might target.

"They haven't called yet," quipped Mr. Baskin, who unlike Mr. Levine, indicated he might be tempted to sell.

"Everything is for sale at some price," he said.

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