Monette Windsor, managing director of MUFG Alternative Fund Services (Cayman), describes some of what happened when her previous company was acquired late last year and what others can expect when such a transaction takes place.
On December 11, 2015 MUFG Investor Services purchased the Alternative Fund Services business from UBS. Included in the deal was the Cayman Islands office, for which I am the managing director. It was the first time in my career that I had been involved in a transaction and it has been a very challenging, interesting and ultimately fruitful journey for colleagues, clients, myself and the region. At times it felt as though I was in a Hollywood movie with lots of excitement and suspense.
When people first hear the news that their company may be for sale, the first thought they have may be “Yikes!” or some other more colourful expletive. It’s a natural reaction to be worried and concerned about your job security and that of your colleagues. Who’s going to purchase you and what will their view on Cayman be? Will you still have jobs at the end of all this?
We had witnessed other admin shops go through acquisitions or changes in business strategy, resulting in jobs leaving Cayman for other, lower cost jurisdictions. So it was a valid concern that I knew my colleagues and clients would have, when they found out we were for sale.
By far the most difficult part of being put up for sale is not being able to tell people. You have to sign a non-disclosure agreement prior to being brought ‘over the wall’. Legally you can’t discuss the potential sale with anyone who is not over the wall, as this could be considered insider trading, especially if you’re dealing with public companies.
At the beginning, only a handful of people are in the know, and the burden of putting together the presentations and responding to the numerous questions falls squarely on their shoulders. You have to reach out to colleagues, without revealing the reason, for specific information. But it’s the right thing to do, both legally and practically.
"You can’t overestimate the amount of work that goes into planning and executing a smooth transition."
Early on, there could be several potential acquirers, including some you suspect aren’t actually serious buyers, but who are in fact just interested in gaining information. And there is the real risk that a deal doesn’t get done at all. The future is uncertain and therefore it can be quite a stressful time. Ultimately the fewer people who know, the better.
The next phase is when the acquirer has been selected. When it was confirmed that MUFG Investor Services would be the ones purchasing us, I wanted to shout it from the rooftops. They were by far my number 1 choice.
Mitsubishi UFJ Trust and Banking Corporation (MUTB), part of Mitsubishi UFJ Financial Group (MUFG), entered the fund services space in 2013 with the acquisition of Butterfield Fulcrum. The new fund administration business rebranded as Mitsubishi UFJ Fund Services, and subsequently acquired Meridian Fund Services Group in 2014. MUFG rebranded its asset servicing business as MUFG Investor Services in 2015 as it continued to rise as a major investor services player and to demonstrate its holistic offering to the market, which includes custody, middle-office, depository, trustee and banking among other services.
MUFG Investor Services wants to continue to grow globally. This acquisition is not a cost play, but about driving growth of the business and continuing to support clients throughout the investment lifecycle. All 160+ staff from the fund services businesses in Cayman, along with our colleagues in Toronto, New York, London, Dublin, Jersey, Hong Kong and Singapore offices would be coming over. They found our Cayman fund of funds business and banking licence particularly attractive and MUFG Investor Services already had a presence with a Cayman office.
Additionally, I thought our clients and their institutional investors would be comfortable moving from our current parent, a large global bank, to our new parent, an even larger global bank, which is committed to the investor services sector in the long run. Being able to retain all of our banking, credit and foreign exchange offerings was also an important win.
Although I was thrilled with this news, I still couldn’t share it with most people. We had several conference calls with lawyers, human resources and marketing representatives from both sides, trying to determine the timeline for disclosing to clients, colleagues and the press. Staying true to the legal obligations, particularly in the face of pointed questions, was challenging. It was a difficult time. I was so relieved when we finally issued the press release on June 18, 2015 announcing our good news.
The hard work was just beginning. The transition streams that we had set up earlier in the year were now in full force. We had separate streams focusing on operations, IT, banking, human resources, communications, compliance and legal, with representatives from our old parent company, our new parent company and our own business. As most calls included people from the Americas, European and Asian time zones, there were a lot of early morning calls.
You can’t overestimate the amount of work that goes into planning and executing a smooth transition. Luckily our business has run quite independently from our parent company in terms of systems and processes for fund admin, but there were still a lot of other supporting systems and processes, for human resources, financial control, etc, that had to be considered. It was also beneficial that MUFG had been involved in prior acquisitions—their experience was invaluable.
A number of decisions needed to be made, some small and some big, to ensure a smooth transition—this was in addition to our regular day jobs. When possible we tried to reallocate work and have certain individuals focused on the transition. Still, a lot of people pulled some massive overtime hours, for which I and the senior management are very grateful. They really helped to ensure a smooth transition for our staff and clients.
For anyone who’s going through an acquisition, my advice would be to stay calm and prepare yourself well. It’s going to be a long journey, but hopefully when you get to the other side, you’ll find that the grass is indeed greener, as we have found.
Monette Windsor is the managing director of MUFG Alternative Fund Services (Cayman) Limited, which is part of MUFG Investor Services. She can be contacted at: email@example.com
Monette Windsor, MUFG Alternative Fund Services, Mergers & Acquisitions, M&A, Cayman Islands,