Neal Simon, founder of Highline Wealth Management, sold the Rockville-based company to Bronfman E.L. Rothschild last week for an undisclosed amount of cash and stock. (Brooks Kraft/Courtesy Highline Wealth Management)
Reporter

Neal Simon has run five companies, and each time he has hired or teamed with smart people who make him look good.

Last week, he sold Highline Wealth Management, his Rockville-based company, to Bronfman E.L. Rothschild, which features two of the most respected family names in world finance.

Yes, that Bronfman, whose family built its multibillion-dollar fortune upon Joseph E. Seagram & Sons, once the largest alcoholic beverage firm in the world.

Yes, that E.L. Rothschild — the $20 billion scion of the global family whose banking business dates back to the 1760s.

“What I have done right is surround myself with great people and good investors,” said the 47-year-old money manager. “I never tried to make it all about me.”

Simon, who loves operating a business, is taking over as chief executive of Bronfman E.L. Rothschild (the Highline name is going away), and he will run the global firm from Rockville.

The joint firm manages more than $3.6 billion in assets from about 1,400 “relationships,” which is investment-speak for households. Most of those are wealthy families and entrepreneurs with closely held businesses. The rest are institutions such as foundations, endowments and pension plans.

The two companies were introduced by one of Highline’s owners, Evan Morgan, who works at Steve Case’s Revolution LLC, a D.C. investment firm. Morgan is friends with Eli Goldstein, who is a board member of Bronfman E.L. Rothschild.

Simon’s first meeting with Bronfman E.L. Rothschild Chairman Matthew Bronfman took place in February over lunch at an auspicious location: The Four Seasons restaurant, located in the iconic Seagram Building on Park Avenue in New York City.

“I felt comfortable with him right away,” Bronfman said of Simon. “I like him personally. He is a very good executive . . . a perfect fit for our Bronfman Rothschild business.”

Bronfman said the company was already in the market for a new chief executive to replace the one who had departed, and Simon’s timing was right.

“Neal really filled that hole we had,” Bronfman said. “He has a lot of gravitas. He is very strategic. He is really an executive, a good motivator of people. He has a vision for the business.”

The cultures fit.

Simon, who has been a business consultant and entrepreneur, has honed his management style to fit the professional services business.

“This is the fifth company I have run, so I am an entrepreneur within the professional services world,” he said. “I treat everyone as partners. You can’t be autocratic. You have to be much more collegial in professional services. I manage a process where we can use everyone’s ideas and intelligence and implement a real investment strategy.”

His big hires include Jay Weinstein, who runs the firm’s equity group, and Bill Schwartz, an accountant and partial owner who helps map the long-term financial strategy for clients.

The combined firm may be the biggest one of its kind in the Washington area.

Simon would not disclose the terms of the sale, but he said he and the rest of his Highline shareholders were paid in cash and stock. They now own a significant chunk of Bronfman E.L. Rothschild.

Similar firms are selling for 10 times free cash flow, which could put Simon’s sale price anywhere between $15 million and $30 million, by my estimate.

“We did this because we think it’s good for the clients, it’s good for our employees and good for our shareholders,” Simon said. “That is what gets me up in the morning.”

Highline shareholders include Schwartz, several other employees and an outside Washington-area investment firm, Sachs Capital, run by Andrew Sachs.

The name Highline comes from a ski trail in Vail, Colo., but “we also like to think about it as symbolic of our investment objective, which is high returns without a lot of volatility,” Simon said.

I never met any investor who wanted something other than high returns and low volatility.

“We invest in a combination of stocks, bonds and alternative investments, including different types of hedge funds, hedge equity, credit-oriented strategies and commodities,” Simon said.

Simon is swimming in some competitive pools. Philadelphia-based Glenmede and New York City-based Bessemer Trust both have offices in Washington, and there are local boutiques such as Michael Farr’s Farr, Miller & Washington.

The joint firm has
81 employees and nine offices around the United States, including Philadelphia, New York, Washington and several locations in the Midwest, including Minneapolis and Milwaukee.

Why did he sell?

“This makes us better, brings in new talent, enables us to negotiate better deals with Schwab and Fidelity,” two firms that handle the administrative functions of holding client accounts, Simon said. “It sets us on a path for even more growth, enables us to go after more merger and acquisition opportunities, enables us to attract more advisers.”

Clients must have at least
$1 million in investable assets, which is down from Highline’s former minimum of $2 million. Simon said it was dropped by half “because we have added a lot of people and capability to serve smaller clients.”

Clients are typically charged about a 1 percent fee on their total amount of assets, depending on size. Clients with more assets generally pay on a sliding scale.

Based on that, I estimate the combined firm should take in as much as $30 million annually in revenue.

Bronfman E.L. Rothschild wants to grow.

“Our goal is to grow this substantially,” Simon said. “We can do that both organically and inorganically. Together, we can grow more quickly.”

Unlike some exuberant Wall Street characters, Simon is a soft-spoken math whiz who prefers spreadsheets and bullet points to rambling narratives.

He graduated from Brown University, where he studied applied mathematics and economics. He also has an MBA from the University of Chicago.

He may be soft-spoken, but he lives by advice dispensed by an uncle who was chief executive of a publicly traded company.

“He said, ‘Hire slowly. Fire quickly.’ Make sure you hired the right people, and if you don’t, you’ve got to make the changes quickly.”

Simon’s career started in management consulting for a small firm, William Kent International, where he rose to chief operating officer.

He left, and in 1999 started USLaw.com, an online network where consumers and small businesses could do research and chat about legal issues. Simon sold USLaw.com to New York investors in 2001.

To this day, he wishes he had a do-over on USLaw, which was not a bust but not the home run it might have been.

“We raised a lot of money, grew the company a lot. Then we shrunk the business before we sold it,” he said. “If I could do that over again, I would have given myself more time with the capital we raised to continue to grow the business.”

He moved on to the Meltzer Group, a well-known Washington financial services company where he was hired as president and chief operating officer.

While at Meltzer, he launched an investment advisory partnership with the Meltzer Group. He eventually bought Meltzer out of its share and renamed the company Highline Wealth Management.

And now, Highline is Bronfman E.L. Rothschild.