Abel/Noser Corp., the company that was a pioneer in analyzing trading costs for pension funds and other institutional investors more than 40 years ago, is moving into a new era with new ownership— but with leaders already familiar with the firm.
Executives at New York-based Abel/Noser plan to use the management-led buyout of the firm announced July 14 as a springboard for expansion, specifically by buying other, smaller firms.
“We'll have the opportunity to make acquisitions and strategic partnerships,” said Peter Weiler, president of Abel Noser Solutions, the firm's financial technology unit. “The other thing is that for our clients, it answers the succession plan question.”
Some areas Abel/Noser would be interested in moving into are European and global distribution and the acquisition of smaller transaction-cost-analysis firms, “things more along the lines of distribution and less on wholesale changes,” added Ted Morgan, the new CEO of Abel/Noser Corp. He replaced William Conlin, who retired.
Abel/Noser will be in a position to expand through the investment of private equity firm Estancia Capital Management LLC, Scottsdale, Ariz., which is taking a controlling stake in the firm as part of the buyout. Details of the deal were not disclosed.
The buyout of Abel/Noser Corp. is the end of an era for company founders Stanley S. Abel and Eugene A. Noser Jr., who started the firm in 1975 and who were the creators, among other things, of commission recapture, transaction-cost analysis and the use of volume-weighted average pricing to measure best execution of trades. Abel/Noser now has 300 metrics for more than 90 markets worldwide, including futures and currencies, and is planning to do TCA for fixed income.
Mr. Abel is 85 and “I'm the junior partner at 80,” said Mr. Noser. “We both felt it was time. The people we're turning the firm over to have all been at the firm at least 10 years. They've been doing much of the work already; we (Messrs. Abel and Noser) have not been running the day-to-day business here for some time.”
Mr. Morgan was chief operating officer of Abel Noser Solutions, while Mr. Weiler was executive vice president, sales. Anthony Conroy, now president of Abel Noser LLC, the firm's brokerage arm, was head of sales trading.
Abel/Noser will be the first brokerage in the portfolio of Estancia Capital, said Mr. Noser. Estancia focuses on investments in institutional asset management, wealth management and related sectors. The firm has $1 billion in assets, according to its website.
Estancia's offer was chosen because other firms that made offers for Abel/Noser “wanted to swallow up the firm,” Mr. Noser said. “Our people would not have been secure in their jobs.”
Mr. Morgan said Estancia, as holder of a controlling interest, “will have a consideration” in what Abel/Noser does, but “we took careful consideration in the operational agreement about where we're going together. We're off to a great start as far as a vision for the company and to keep our agency focus on the broker side and maintain our dominant position in TCA. We picked (Estancia) because they would be the partner most closely aligned with our vision and the vision of Gene and Stanley. The great thing is (Estancia) liked the vision of our management.”
Mr. Weiler said Abel/Noser clients were told of the deal in advance of the official announcement. “Prior to our announcement, we did a comprehensive client messaging campaign,” Mr. Weiler said. “They took a lot of comfort in us sustaining the firm. They were happy we had a financial partner with deep pockets and that we would continue operations with no interruption.”
Along with growth through acquisition, James Noser, Abel/Noser's executive committee chairman and Eugene Noser's son, said areas where the company could improve internally would be in expanding its market and trade data, and “one growth area would be in trade surveillance,” with greater analysis of the entire trade lifecycle, from before the trade is ordered through when it's completed.
Providing legal counsel on the deal were Lowenstein Sandler LLP to the management team; Morgan, Lewis & Bockius LLP to Abel/Noser Corp. and Goodwin Procter LLP to Estancia. Private equity firm Blacksterling Partners LLC, which also advised Estancia, is a co-investor. Keefe, Bruyette & Woods Inc. provided advisory services to Abel/Noser.
The deal is expected to close in the fourth quarter, Mr. Weiler said. n