Russell Investments also has been whipping through executives. In 2008, Craig Ueland resigned as president and CEO after only five years at the helm. He was replaced by John Schlifske, a Northwestern Mutual executive vice president, as the company searched for a permanent CEO. The following year, Andrew Doman was appointed Russell's new president and CEO, and Mr. Schlifske returned to his duties at Northwestern Mutual. Mr. Doman resigned two years later and was replaced by current CEO Len Brennan.
Russell's troubles soured Northwestern Mutual executives on the business, ultimately resulting in the insurance company putting up the for-sale sign, multiple investment banking and industry sources said.
For its part, Northwestern has been spending time preparing the business for sale. Sources said Russell has been cutting costs and jettisoning some business lines. The ETF business, for example, was cut after two years because of slow asset growth. In 2010, Russell sold its private equity funds-of-funds unit, Pantheon Ventures Ltd., to Affiliated Managers Group Inc. and senior management.
While another asset management firm such as SEI Investments Co. or a large investment consultant or actuarial consulting firm would appear to be other natural buyers, sources said private equity firms are expected to be the most aggressive bidders.
Private equity firms and other alternative investment managers have been ardent pursuers of money management firms. Just last year, Grosvenor Capital Management LP bought Credit Suisse Group AG's private equity and real estate investment groups. Also last year, The Carlyle Group bought two more funds-of-funds firms to add to its 2-year-old acquisition of AlpinVest. And two years ago, Carlyle bought 60% of Los Angeles-based TCW Group.
Private equity firms would acquire the company using private equity fund capital, sources said, as Carlyle did for TCW.
“My opinion is that a number of private equity funds will certainly be in the (sale) process,” said Jeff Bunder, global private equity leader at Ernst & Young, New York. “But I have to say that's not necessarily any different than any other sector these days. It's a competitive market, especially for assets of size.”
The largest private equity firms have been able to raise megafunds and are searching for very large deals, he said. With very few of those possible transactions on the market, any deal of size will get a lot of attention from big private equity firms, he said.
These days, private equity firms are shopping for deals in the $3 billion to $5 billion range, with some firms willing to stretch up to $10 billion. That's up from the $5 billion to $7 billion range 12 to 18 months ago, Mr. Bunder said.