Roberto DeGuardiola approaches mutual fund mergers like a matchmaker introducing the children of royal families.
"We are all going to die," Mr. DeGuardiola says. And like kings and queens, mutual fund entrepreneurs want to ensure that their dynasties will live on and prosper when they're gone.
With that in mind, Mr. DeGuardiola in July introduced Edward "Ted" Bauer, the 77-year-old founder of Aim Management Group Inc., to Great Britain's Invesco PLC. Four months later, Mr. Bauer agreed to merge his $57 billion mutual fund business with Invesco, satisfied that Aim will long remain a recognizable part of the combined company.
Advising Aim on that $1.6 billion transaction - the largest ever between a U.S. fund company and a foreign player - would have been a plum assignment for any Wall Street powerhouse or boutique vying for a role in the quickly consolidating mutual fund industry. For Mr. DeGuardiola's one- man shop, Liquid Distribution Systems, it was business as usual.
The 51-year-old former bond salesman has quietly orchestrated 16 asset management deals since he founded Liquid Distribution six years ago. Among his credits: John Hancock Mutual Life Insurance Co.'s acquisition of Transamerica Corp.'s funds in 1994; Massachusetts Financial Services' purchase of the Advest Group in 1995, and the Phoenix Group's deal for a majority stake in asset manager Duff & Phelps in 1995.
Mr. DeGuardiola's deal flow shows no signs of slowing down. He estimates that 60% of all fund companies are owned by entrepreneurs who will eventually want to sell out. And when they do, they are likely to ask Mr. DeGuardiola to help.
"It's a marriage, and the matchmaker's skill is very important in making (two companies) tie the knot," said Ronald Fielding, president of Rochester Funds. Rochester was represented by Mr. DeGuardiola when it sold out to OppenheimerFunds Inc. last year.
Mr. Fielding said Mr. DeGuardiola's affinity for matching the personalities of executives on both sides of a merger is extremely important. Few mutual fund deals are based on numbers alone.
"What I think I bring to the business is a real in-depth knowledge of the industry and what people want to do," Mr. DeGuardiola said.
A robust and imposing man, the Cuban-born Mr. DeGuardiola took a roundabout route to the deal-making business. He spent 17 years on Wall Street pushing bonds, first for Kidder Peabody & Co. - where one of his customers was Aim's Mr. Bauer - and later for Lehman Brothers Kuhn Loeb, PaineWebber, and Clearwater Benson.
In 1988, Mr. DeGuardiola joined an investment banking boutique with some former Lehman colleagues. It was there that he worked on his first mutual fund merger. While that transaction never came to fruition, it got Mr. DeGuardiola hooked on funds. He spent the summer of 1989 at a mutual fund company, learning the business from an insider's point of view.
That experience has served him well. Mr. Bauer said droves of investment bankers approached him this summer with possible merger partners. But only Mr. DeGuardiola's idea to combine with Invesco made sense.
"Roberto does his homework," Mr. Bauer said. "He just gets executives together and sees if something can be generated and if it makes sense or not." The Aim-Invesco deal, he said, "gives us the pieces we both needed for the future."
Because he works for himself, Mr. DeGuardiola has the luxury of toiling on deals for a long time. He talks to an executive an average of two years before doing a transaction for his or her company, he said. He spoke to Mr. Fielding for five years before Rochester was sold.
"Wall Street is short-sighted," Mr. DeGuardiola said, reflecting on his experience at Paine Webber. "I'm happy to do one deal a year, and I do three to four a year."
Mr. DeGuardiola practices his craft out of his apartment in an exclusive Manhattan neighborhood. He never has taken on an associate, and says he never will. His clients are often selling a company they worked hard to build, he points out, and do not want to deal with a junior person.
Mr. Fielding concurred, "He's a one-man band. That's why we retained him."
Mr. Fielding said he liked dealing directly with the man he had hired, adding that working with one person decreased the likelihood of a pending deal being leaked to the media.
Unlike some of his competitors on Wall Street, Mr. DeGuardiola does not actively seek the limelight. Indeed, he seemed somewhat surprised that a newspaper would want to write about him at all. He said he spends the bulk of his time practicing his hands-on approach to deal-making.
"I get very, very involved with all aspects of a deal, including legal aspects," he said, though he does not have a law degree. he said understanding the ins and outs of mutual fund mergers has helped him with smaller deals, which tend to have fewer people involved.
"It's hard work - but what's wrong with that?" he said. Because he immerses himself in a deal, if something unexpected happens during negotiations, he can devote his full attention to it.
Mr. DeGuardiola said he expects most of his work to continue to come from fund entrepreneurs who require his undivided devotion. But he also predicts that many banks will seek to get out of the mutual fund management business over the next 18 months. "Insurance companies went through this," he said.
Even those on the opposite side of the table have respect for Mr. DeGuardiola's skill and insight. "For this guy to come from a sales and trading background to take a significant share of the business from the big firms, like Putnam Lovell (& Thornton) and Berkshire Capital is a pretty big deal," one competing investment banker said.
