By EB5 Investors Magazine Staff
Baker Tilly Capital, a subsidiary of accounting and advisory firm Baker Tilly, earlier this year bought Wright Johnson’s EB-5 consulting practice. The move was an effort to give Baker Tilly a competitive advantage as a one-stop shop for EB-5 financing, the company said.
“We studied the space for a year or so to gauge the market and decided that a strategic acquisition would advance the practice much faster than green-fielding a team,” said Baker Tilly Capital partner Michael Fitzpatrick, who joined Baker Tilly in 2000 and assisted in founding Baker Tilly Capital in 2001. “Kevin Wright and I met and very quickly realized we had a shared vision for the direction of the industry and believed that the combination of our practices would position us as the institutional quality provider of comprehensive EB-5 offering services.”
Baker Tilly is a member of Baker Tilly International, a $3.2 billion network of independent accounting and business advisory firms with 30,000 professionals in 147 countries.
What is the role and mission of Baker Tilly in the EB-5 industry? What services do you offer?
Baker Tilly Capital is a FINRA-member Broker Dealer, which is wholly owned by Baker Tilly Virchow Krause, LLP. Our mission within the firm is to provide clients with access to complex, niche sources of capital that fill a gap in the capital stack between equity and senior debt that offer flexible terms and lower cost. For example, we have one of the largest New Markets Tax Credits consulting practices in the U.S., and we felt that EB-5 would be an important service to offer our clients to compliment the other specialty programs that we offer. With the acquisition of the Wright Johnson consulting practice, we are vertically integrated to offer projects all of the pre-offer consulting services needed to conduct an EB-5 offering, such as TEA designation, Matter of Ho business plans and economic analysis, as well as capital sourcing and securities compliance services.
What does this new addition mean for Baker Tilly and the services it can provide for the EB-5 participants?
We’re very excited to be in the EB-5 market and believe we present a unique value proposition. In addition to the pre-offering consulting services and broker dealer services, we can further differentiate our practice by offering pre-immigration tax planning through our parent firm, which is the largest member of Baker Tilly International, which is the 9th largest global network of accounting firms with presence in 147 countries. From the perspective of an investor, they can invest with confidence knowing that every EB-5 offering we present has undergone rigorous independent due diligence by an institutional-quality firm.
How will your world-wide reach benefit from this new acquisition?
As the largest member of Baker Tilly International, we enjoy strong relationships with our network members, who are eager to collaborate with us. The Baker Tilly name is known worldwide and the trust associated with our brand extends to our EB-5 practice, which gives us recognition in markets we enter. In addition to our collaboration efforts in China, we’re developing distribution channels throughout the Middle East and Latin America. Our clients will benefit from working with a vertically integrated EB-5 practice that provides pre-offering, securities compliance and capital raising services, along with the global perspective to recommend structuring alternatives to appeal to numerous EB-5 markets and cultural preferences.
What kind of compliance services do you offer and why is it important?
Legislators and regulators are accelerating market pressures for the EB-5 market to evolve from the “wild west” to a professional, institutional source of capital that has the same level of integrity of other capital markets. Investor confidence is the cornerstone of efficient capital markets, and broker dealers allow investors to invest with confidence. Because of our status as a regulated entity with oversight from and accountability to the SEC and FINRA, broker dealers are experts operating in a space where they are accountable to the project to efficiently raise capital, while giving investors comfort through the independent due diligence and duty of suitability that a broker dealer owes to each investor. Our capital raising services are fully compliant, and for regional centers with an established distribution channel to source investors, we can offer a customized compliance solution.
How can someone best partner with a broker-dealer? How can it benefit the EB-5 industry?
Broker dealers serve as an agent to help the “new commercial enterprise” raise capital in compliance with US securities laws. Broker dealers will advise on marketable investment structures that are also suitable for investors, so it is best to get a broker dealer involved early in the process before the structure and offering documents are final. Broker dealers have a trusted place in the securities industry to maintain the integrity of financial markets, which will benefit investors and the industry by ensuring compliance, which will reduce the opportunity for fraud to ensure the long-term health of the industry.
What’s the plan for future expansions?
Constant change is one thing that is certain. With changing global conditions and pending EB-5 legislation, our future expansion plans include refining our services to meet the “integrity measures” that will come to regional centers, and to leverage the Baker Tilly International network to respond to geopolitical events that may spark demand for EB-5 in countries not presently served by the market. Further down the road, our plans include forming a private equity fund to bridge EB-5 capital raises.