Less than a year after its founder was killed in a plane crash, Robert R. Meredith & Co., a bond shop serving wealthy investors, has been acquired by Ascent Asset Management Advisory Services Inc., a fledgling firm just 4% of its size.
Ascent, which specializes in stock investing for the rich, competed with 20 others to buy the company from the estate of Robert R. Meredith, who died in April at age 54 when the Piper Malibu he was flying crashed near Waldron, Ark.
Mr. Meredith launched his New York-based firm in 1991 after 10 years of advising wealthy investors and institutions at Morgan Stanley & Co. Inc.
For Ascent, also based in New York, which has struggled since its launch in February 1998, the acquisition pushes its assets under management to almost $1 billion from $37.5 million. The deal also allows it to attract more clients because it can offer a fuller array of investment options.
"It was literally a minnow acquiring a whale," says Ascent chief executive Peggy A. Farley, who managed the U.S. investments of a London family before founding Ascent, which also runs money for institutions.
Instant bulk
"The time horizon for growing a firm from nothing to something that is an effective size is a long process," she says. "I saw the acquisition as the ability to fulfill my five-year plan in a day."
Also a Morgan Stanley veteran, Ms. Farley was a senior associate in the firm's international corporate finance group from 1978 to 1984. However, she did not know Mr. Meredith. Ms. Farley says the purchase agreement prevents her from discussing terms of the deal.
"It was not just the highest bidder, but someone who was the right fit for their clients" says Ms. Farley of the bidding process, adding that her bid was selected by a committee including Meredith clients, representatives of his estate and employees of his firm. Most of Ascent's clients have come into their money by selling their businesses.
The acquisition officially closed Sept. 30, but was announced last week. The combination is called Ascent/Meredith Asset Management Inc. Ms. Farley says she has kept all of Meredith's staff, for a combined staff of 20. Ascent had a staff of only four.
Its minimum investment was $500,000, while Meredith required $5 million. Ms. Farley says she is keeping the $500,000 minimum for an all-stock account, but accounts that combine stocks and bonds have a $5 million minimum.
In addition to the acquisition of Meredith, the firm expanded into merchant banking. It has begun raising money for a $100 million private equity fund that will invest in young medical technology firms. Its new merchant banking subsidiary, Ascent Private Equity LLC, is headed by Mark Maciejewski, who prior to joining Ascent launched a number of medical device ventures.
What a coup!
"To be able to manage a billion worth of bonds right away, for a firm like Peggy's that was a coup," says Mary Pat Thornton, a managing director in New York with San Francisco investment bank Putnam Lovell de Guardiola & Thornton.
As long as Meredith's investment staff stays with the combined firm, the clients Ascent inherited with the acquisition should also stay put, says Ms. Thornton.
"What she has done is catapult herself to another level where she will get serious attention from the investment community as well as from clients who would be concerned her firm was too small to manage their portfolios," adds Ms. Thornton.
