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Tuesday, August 09, 2022

What an $81B-AUM Firm's New Chief Is Hunting

Reported by Neil Anderson, Managing Editor

When it comes to further M&A opportunities, the new chief of an $81.2-billion-AUM (as of June 30), multi-boutique asset manager has a number of things he's looking for. He's also continuing to build out his team.

Jeffrey Karl "Jeff" Ringdahl
Resolute Investment Managers / American Beacon Advisors
President, CEO
"We're going to continue to build our multi-affiliate platform," says Jeff Ringdahl, president and now CEO of Resolute Investment Managers and its American Beacon Advisors [profile]. "We don't do transactions for transactions' sake. We partner up where we think we can be a value-added partner."

Irving, Texas-based Resolute has two really important strengths, Ringdahl explains to MFWire. The first strength is manager research, which involves "identifying differentiated, high-performing active managers," Ringdahl says, and the second strength is distribution, "bringing that investment talent" to advisors, consultants, and other channels. Those two strengths frame how the Resolute team looks at potential acquisitions.

"Any transaction that we do ought to be a differentiated capability," Ringdahl says. "That leaves a lot of green space out there."

In terms of specific types of capabilities that Ringdahl is interested in potentially acquiring, he points to several areas, including non-investment grade credit, non-U.S. equity, and liquid alternatives.

As for deal structure, Resolute's deals have varied in the past, yet with several exits last year and one boutique winding down, Resolute will now have five investment boutique affiliates (including American Beacon), all of which are majority-owned by Resolute. Going forward, Ringdahl expects to mostly stick to buying majority stakes in new affiliates, with an eye towards permanent ownership while the boutique's employees keep a stake.

"We wound up with a more simple model," Ringdahl says.

In light of that focus, "culture absolutely matters," according to Ringdahl.

"If you're going to have a permanent relationship with a firm and the management team at the firm, you'd better see eye to eye," Ringdahl says. "They don't have to have the same values, but they have to be congruent."

"That's more art than science. You have to get to know folks," Ringdahl adds. "We've definitely walked away from transactions where we felt there wasn't that compatibility."

When it comes to geography, Resolute is "very open-minded," Ringdahl says. He's interested in expanding overseas, if he can find a good non-U.S. target that could help the Resolute team expand their distribution reach.

"Our distribution footprint is U.S.-based," Ringdahl says. "Eventually, we do want to have a global distribution footprint."

In terms of size, Ringdahl says Resolute's sweet spot is boutiques with between $5 billion and $15 billion each in AUM. And they typically target employee-owned boutiques, especially institutional ones looking to broaden their distribution.

"We are helpful as a permanent capital solution," Ringdahl says.
Those management teams operate with a high degree of autonomy. That only works if they're owners of the business alongside us. That employee ownership brings with it a tremendous amount of trust and alignment.

As for Resolute's ownership, Kelso & Company, a private equity company, remains the majority owner. Despite reports to the contrary, Ringdahl confirms that Resolute itself is not for sale right now.

Looking ahead, beside building an ETF platform and hunting for deals, watch for the Resolute team to expand.

"We're going to invest in our client service and distribution platform," Ringdahl says, noting that they're adding people in product management. (Combined, Resolute and its affiliates have about 200 employees in total.) "We're hiring." 

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