An asset management industry veteran's new private equity shop is about to acquire its first mutual fund shop. Meanwhile, that shop's founder is retiring. Watch for the acquired mutual fund shop's distribution efforts to ramp up.
| David Minella|
Minella Capital Management
Naples, Florida-based Minella Capital Management
is buying a majority stake in Norwood, Massachusetts-based W.E. Donoghue & Co
] (WEDCO), Minella Capital managing member David Minella confirms
. WEDCO offers the Power Funds
The target closing date is September 30. Pricing and terms of the deal were not disclosed. Silver Lane Advisors
advised WEDCO on the deal. Alston & Bird
provided legal counsel to WEDCO, while Finn Dixon & Herling
provided legal counsel to Minella Capital.
WEDCO has 15 employees and works with $1.7 billion in client assets (which includes both AUM and AUA).
, the 47-year-old president of WEDCO, confirms that WEDCO's 75-year-old founder and chairman, Bill Donoghue
, will retire once the deal closes. Donoghue founded WEDCO in 1986. Thompson notes that Donoghue "has not been actively involved in the day-to-day management of the firm for a good five years."
The Minella Capital deal, Thompson says, is the culmination of "a succession plan going back to about 2010 between ... [WEDCO's] founder, Bill Donoghue, and some of the core employees here." The sale, Thompson adds, "is enabling that whole [succession] process."
Three members of the WEDCO management team "purchased new or additional equity" in the firm as the part of the deal, Minella says.
"The management team is very supportive of the transaction and has significant equity going forward," Minella says. "There are six management team members that own equity in the company."
"More folks have skin in the game," Thompson says.
Looking ahead, Minella and Thompson confirm that the WEDCO distribution team, led by national sales manager Curt Meyer
, will grow by 50 percent in the coming quarters. WEDCO now has six people out in the field, five wholesalers and a sales manager, Thompson says, and he expects to add two more wholesalers by the end of 2016 and a third in the first quarter of 2017.
The WEDCO team first focused their distribution efforts in the direct retail channel. Yet they have since been "gradually phasing out" that channel, focusing more on intermediaries, especially the independent broker-dealers and RIAs. Watch for that range to widen again once the deal goes through.
"It's our intention to more or less swim upstream to the wirehouse channel as well," Thompson says, noting that WEDCO is currently "going the final stages of GIPS verification."
WEDCO's own William Dowler
has also been promoted to chief compliance officer, a role WEDCO had previously outsourced, Minella says.
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