When Tom Dorsey sold a majority stake of his local investment firm to a private equity company in 2011, he said at the time that he’d stay on as CEO until the next deal came along.
That next deal has arrived – and it’s a big one.
His firm, Dorsey, Wright & Associates has struck an agreement to be acquired by stock market giant Nasdaq for $225 million, the companies announced Monday. The deal is expected to close during the first quarter.
“It’s definitely a feeling of achievement,” said Dorsey, who co-founded the firm. “We started with $90,000 borrowed. It’s the story of a Richmond company that started 28 years ago with nothing and made something.”
About three years ago, DWA sold a 65 percent stake to Falfurrias Capital Partners, a North Carolina-based private equity firm founded by former Bank of America CEO Hugh McColl.
Dorsey, who held on to most of the remaining 35 percent stake, said the Nasdaq deal finally marks the sale of the entire company.
“Within a five-year period, a private equity company is going to do their best to help you increase your earnings and then you’ll be sold again,” he said. “We needed a strategic buyer where we bring something to the table to them and they bring something for us. And that was Nasdaq.”
DWA has three main lines of business: a money management practice that handles $5.5 billion in client assets; an investment research arm that sells technical analysis and reports to financial firms; and its own line of exchange-traded funds that it can sell to those customers.
ETFs are essentially investment funds that are operated and managed largely by computer programs without much, if any, human intervention.
“We write the rules, the machine does the rest,” Dorsey said.
DWA offers 17 ETFs that will join dozens more run by Nasdaq. The deal also allows Nasdaq to further diversify its business outside of its stock market exchange operations. Nasdaq’s clout and global presence will help grow the Dorsey brand that Dorsey said is more well-known outside of Richmond.
“We’re a household name on Wall Street and nobody knows we’re in Richmond,” Dorsey said. “I’m more apt to be asked to speak in London than I am in downtown Richmond.”
The DWA brand will remain and its operations will continue to be based in Richmond, Dorsey said. The company’s 18 local employees operate out of 1011 Boulder Springs Drive. Four additional employees work out of an office in California.
Dorsey, 67, said the Nasdaq deal doesn’t mark his full retirement. He’ll stay on as a consultant to DWA and Nasdaq for a time, and he will keep an office downtown near the Jefferson Hotel where he manages money and his wife and daughter operate a historic home renovation business.
“I’ll be going into consulting mode and maybe see what it’s like to a take a vacation that lasts longer than a week,” he said.