TPG Musters 150 Staffers to Work on Angelo Gordon Integration

The manager has spent $15 million and assigned nearly 10% of total staff at the two firms to close the merger and smooth the transition.

TPG is lobbing staff, money and other resources toward its planned acquisition of Angelo Gordon & Co., assigning 150 employees and spending $15 million last quarter in efforts to close the deal and notch a smooth integration.

The $139 billion manager announced its plans in May to acquire Angelo Gordon, a private credit and real estate specialist, for $2.7 billion in cash and equity. The combined firm would have $208 billion in assets and 1,800 employees after adding Angelo Gordon’s $73 billion in assets and 650 staffers, including 245 investment professionals.

The deal recently won Hart-Scott-Rodino filing clearance from the Federal Trade Commission, but other approvals are pending, according to TPG. The acquisition would close in the fourth quarter, but much of the integration effort to merge the two firms is underway, with some work having begun even prior to the deal announcement, said TPG CEO Jon Winkelried on the manager’s second quarter earnings call yesterday.

“More than 150 people across our two firms are involved in integration planning,” he said. “Well in advance of signing the transaction, we stood up seven working groups focused on critical areas such as capital formation, people and culture, and firm operations. Each group is co-led by senior TPG and Angelo Gordon leaders and includes representatives from various business units and functions.”

Those efforts include a senior team focused on new product development, aiming to launch strategies that draw from each firm’s respective investing base, Winkelried said.

“The group, which includes more than 20 business leaders from Angelo Gordon and TPG, is scoping and fleshing out a series of combined growth initiatives and building execution plans around each one,” he said.

The scope of TPG’s effort – and the level of detail the firm is sharing – are both notable and may signal how seriously the firms are trying to ensure a successful integration, said Jason Walker, co-founder and managing director at Thrive HR Consulting.

“It’s a pleasant surprise to see so many groups pulled in to make the deal work effectively,” he said. “So many deals don’t go that way, where the CEO puts an executive sponsor in charge and says ‘Go do it.’ When you’re talking about bringing 20 senior business leaders together and initiating work plans around each one of them, that’s different.”

The fact that TPG can count how many people are getting “pulled in from their day jobs,” also is an interesting disclosure, given that it suggests the firms are managing the process and measuring results, Walker said.

“That’s a little bit different,” he said. “A lot of times, the CEO doesn’t even know who is working on the acquisition.”

TPG contends the effort is going well.

“Overall, our working groups have made considerable progress on their objectives,” Winkelried said. “Importantly, these working groups have also become a forum for engagement and relationship development between TPG and Angelo Gordon.”

The $15 million TPG spent last quarter was on matters such as due diligence, integration tasks, lawyers and consultants, with coming quarters likely to log lower expenses for the effort, said Jack Weingart, chief financial officer at TPG, on yesterday’s earnings call.

The integration is focusing on “operational readiness,” business integration and revenue growth goals, Winkelried said. That includes melding service functions such as finance, information technology, operations and accounting, he said.

While the initial discussions with Angelo Gordon began last year, as an acquisition gained traction, both firms began growing the number of people on internal teams focused on a potential merger, Winkelried said in June during a Morgan Stanley analyst forum. The manager wants the post-merger company to operate differently than its past experience with Sixth Street Partners, a credit manager it previously owned but that decided to part ways with TPG in 2020.

“The basic lesson is that Sixth Street operated essentially as an independent platform,” he said. “[T]here are naturally things that are harder to do with respect to synergies… Something as simple as incentives and incentive structure in terms of sharing economics, how do you cross incentivize people to work together? It’s harder when you have kind of a walled-off business relative to the rest of the firm.”

Instead, Angelo Gordon will operate as a “sixth” internal platform, with uniform oversight and governance, Winkelried said, though noting that TPG doesn’t plan to change how the acquired firm’s investment teams run strategies.

The focus on new products is concentrating on several areas, including building on Angelo Gordon’s current menu to deliver and develop more credit strategies for the insurance marketplace, Winkelried said on yesterday’s call. Another core focus is tapping into Angelo Gordon’s credit and real estate offerings for the development of new semi-liquid alts strategies for the advisor market, he said. And the firms also plan to build on Angelo Gordon’s existing private credit strategies by expanding the types of borrowers and loan sizes they target, he added.

The level of detail TPG is offering about its integration plans appear aimed at reassuring employees, shareholders and investors, Walker said.

“You usually just get pablum,” he said. “[Winkelried] gave some more concrete examples.”

For more information on M&A integration, contact Thrive HR at (408) 799-1425  or www.thrivehrconsulting.com