Acquisition Of Private Capital Management Set To Triple Wealth Management Revenues For Legg Mason

by Philip Morton, InvestorsOffshore.com

01 June 2001

Legg Mason and Private Capital Management (PCM) have announced this week that they have entered into an agreement whereby Legg Mason will acquire PCM, and its affiliated entities, for a cash payment of US$682 million.

PCM is an independent, privately owned investment management firm with over US$8 billion in equity assets under management for approximately 1,500 high net worth individuals, families, endowments, foundations and selected institutions. Since December 31, 1986, PCM has achieved a 24% compound annual rate of return by consistently applying a highly intensive, research-focused investment process that concentrates on small- and mid-cap US equity securities. Over the five calendar years ended December 31, 2000, PCM's revenues have grown at a compound annual rate of 48% and its assets under management have grown at a compound annual rate of 50%.

PCM is a limited partnership owned by its co-founder, Miles Collier, and by its two operating principals: Bruce S Sherman, who co-founded the company with Mr. Collier in 1985 and serves as PCM's chairman and chief executive officer, and Gregg J Powers, president. Messrs Sherman and Powers jointly stated: 'We are most pleased that PCM will be partnering with such an outstanding financial services organization as Legg Mason. In our desire and efforts to build upon PCM's strong investment performance, we have sought an association that will expand our ability to provide individual client service. Of paramount importance in our selection of Legg Mason was their understanding of, respect for, and commitment to our investment process, so that there will be absolutely no change in our investment philosophy or discipline.'

Legg Mason, headquartered in Baltimore, is a holding company that provides asset management, securities brokerage, investment banking and related financial services through its subsidiaries. As of March 31, 2001, Legg Mason had aggregate assets under management of $139.9 billion, and its wealth manager subsidiaries and affiliate managed or supervised assets of $7.1 billion.

Raymond A "Chip" Mason, chairman and chief executive officer of Legg Mason, commented: 'We are delighted that PCM is joining Legg Mason. In our opinion, Bruce Sherman and Gregg Powers, together with the rest of the PCM management team, are some of the most talented individuals in the wealth advisory business and will enable us to significantly further our strategic objectives in wealth management. We look forward to working with them for a long time.'

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