Mutuals.com is attempting to increase its $240 million of assets under management by buying other investment companies, with the goal of reaching $10 billion in assets under management by the end of 2005.
Mutuals.com is targeting investment companies, including mutual fund companies, hedge funds and private money managers that generate at least 60% of their income from asset-based fees. The failure of the firm's advertising efforts to accrue significant assets inspired executives to shift to an acquisition strategy.
Because of the economic situation, prices for money management firms have generally fallen, said Rick Sapio, president and CEO of Mutuals.com. Furthermore, with a shrunken asset base, management firms command even less. "You're getting a double benefit: you're paying less and you're buying less in assets," Sapio said.
The firm has already collected $15 million towards acquisitions but can easily gather more in the face of a choice deal, Sapio said. "The $15 million is just a start; we can raise any amount of capital that fits the deal," he said, explaining that the company's investors recognize the opportunities represented by the depressed stock market.
Started eight years ago, Mutuals.com has managed to become profitable by shifting its own operating strategy. Specifically, the firm stopped trying to sell directly to investors, instead outsourcing most services and paring its staff from a high of 37 to its current total of eight. Sapio explained that acquisitions will help Mutuals.com increase its asset base while maintaining a streamlined investment staff.
The company has three main lines of business: mutual funds; private money management for wealthy individuals, trusts, and corporations; and a mutual fund trading platform for investors with at least $1 million in investable assets.