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Rating:Marsico and BofA Find Deal Mutually Beneficial Not Rated 2.0 Email Routing List Email & Route  Print Print
Tuesday, August 07, 2007

Marsico and BofA Find Deal Mutually Beneficial

Reported by Erin Kello

The price Tom Marsico paid to buy back his namesake company from Bank of America has been revealed and both sides should be very pleased with the outcome of the deal. In an SEC filing Marsico reported paying a price of $2.7 billion, including fees and expenses.
Tom Marsico
Marsico Capital Management, LLC

Marsico is getting the cash for the deal from Goldman Sachs, which is providing a $1.2 billion loan and a $25 million revolving credit facility.

As of March, 31 of this year, Marsico had $87 billion in assets under management, so the price Tom Marsico paid to buy back his business is a typical 3.1 percent of the AUM.

When BofA purchased Marsico Capital Management in 2000, the bank paid a whopping 7.3 percent of the $15 billion AUM at the time. This was the highest ratio ever tracked by the MFWire.

Despite the decline in the price to AUM ratio, BofA made a very healthy return on the deal, paying $1.1 billion to pick up Marsico and getting $2.7 billion for the sale, a mere seven years later.

From the deal, Marsico was able to gain the scale to become an viable institutional money manager.

The lesson other potential buyers of money management firms can learn from this deal is, if the firm is a fast grower, it is worth paying a premium to pick it up because the end result is a healthy return.

Post-closing, look for BofA to be in the market for another acquisition, as it now has $1.6 billion in mad money on hand.  

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