An industry veteran is about to make his new private equity shop's first mutual fund firm acquisition, and he's looking for more.

David Minella Minella Capital Management Managing Member

Last month David Minella of Minella Capital Management unveiled a deal for his eponymous, Naples, Florida-based private firm to buy Norwood, Massachusetts-based mutual fund shop W.E. Donoghue & Co [profile] (WEDCO). Minella aims to close that deal on September 30.

"Then we'll look for other opportunities to tuck inside of that," Minella tells MFWire. "They've got a good retail distribution platform ... and we'll look for other products to bolt on."

Minella says he "would entertain" acquiring other firms or practices to combine with WEDCO.

"We're in preliminary discussions with a number of firms as we speak," Minella adds. "Any time you announce a transaction, a lot of people get interested in what you're doing."

"We're also going to be keeping our eye out for strategic partners or other firms that we may engage in conversation," Jeff Thompson, president of WEDCO, tells MFWire. "We do anticipate that we're going to be aggressively growing over the next five years."

Minella looks for "high quality firms with good management teams and attractive asset classes" and says that WEDCO "checks all the boxes." WEDCO offers low-volatility strategies and has "an outstanding management team," he says. He describes the M&A process as "like dating and marriage all rolled into one."

"I believe we met in early January of this year, we signed a term sheet in March," and then spent three months on the documents. If the September 30 target closing date holds, "so start to finish it'll be a nine-month process."

Any future acquisition targets "obviously have to have a strong investment platform," Minella says.

"We have a strong distribution platform that can help them raise assets. We can help solve that problem for many firms," Minella says, arguing that firms with under $1 billion in assets have to figure out how to grow. "They're going to have to team up with someone and create some economies on the distribution side to survive. We offer that opportunity to the smaller firms."

Minella is a 35-year financial services industry veteran and an alumnus of Bentley University. He previously worked in the mutual fund business at LGT and Putnam, and more recently he worked in private equity with Value Asset Management, Prospect Acquisition Corp, and Aligned Asset Managers (which was backed by GTCR). Now he's independent.

"This is the first transaction under Minella Capital," Minella says.

Thompson says that the team there was looking for acquirers that would offer both autonomy and support. Thompson praises Minella as offering both and praises the private equity player as having "quite a pedigree in terms of being in the asset management business."

"We wanted to partner with somebody who could open doors to help us grow," Thompson says, adding that Minella "is not going to be involved in the day-to-day management of the investments or the company for that matter." 

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