SAN FRANCISCO (MarketWatch) — The hedge-fund group Angelo, Gordon & Co. has signed a letter of intent to buy ForstmannLeff Associates LLC, an investment firm that manages U.S. stocks with $3 billion in assets, according to a media report Monday.
Terms weren’t disclosed, the Wall Street Journal reported in its online edition, but generally, bankers say investment-management firms fetch about 2% of assets under management, plus other considerations, such as earnings – a formula would value the deal at around $60 million. See Wall Street Journal story (subscription required)
The deal is unusual in that a hedge fund is buying a traditional money manager, rather than the other way around, The Journal said.
By buying ForstmannLeff, based in New York and Boston, Angelo Gordon would increase its assets under management to $13 billion and diversify its income streams, The Journal said.
ForstmannLeff originally was part of Refco Inc., the commodities-brokerage firm, The Journal said. When Thomas H. Lee & Partners bought Refco in 2004, ForstmannLeff remained with a company controlled by Refco’s then-chief executive, Phillip Bennett, according to The Journal.
