In 1989, Professor Mark Garman, co-author of the “Garman-Kohlhagen” option pricing formula, founded Financial Engineering Associates (FEA). Over the next 13 years, he established the company as a leading provider of derivative instrument investment tools, physical asset optimization and securities analytics. In 2002, BARRA acquired FEA and shortly after, in 2004, MSCI acquired BARRA. Under the direction of new leadership in Frank Cummings, FEA grew and became profitable, serving more than 100 long-tenured clients with world-class quantitative risk tools. Its 100+ pricing models help traders and risk managers for the value, model and hedge of physical assets and derivatives across the energy, metals and commodity asset classes.
In 2017, MSCI hired M&A to advise them on the best way to divest the FEA business. M&A has extensive experience in advising buyers and sellers of data and analytics companies broadly as well as advising on relevant transactions in the energy and commodities software space.
One challenge of this assignment was that many elements of FEA’s support infrastructure had been integrated into that of MSCI. M&A worked with MSCI and FEA management to resolve separation issues, create a compelling information memorandum, build a comprehensive data room, identify potential partners, and advise on negotiating strategy, value and structure. Following a thorough review of options, MSCI accepted an offer from the Allegro Development Corp. (“Allegro”) to acquire the FEA business and combine it with its CTRM software. Allegro plans to integrate FEA into its existing commodity trading and risk management software and offer world-class analytics to its more than 100 clients.
Marlin & Associates served as exclusive strategic and financial advisor to MSCI and FEA on a complex corporate carve-out. M&A led the preparation of detailed transaction marketing materials, conducted initial discussions with interested parties, facilitated information exchange, advised on the negotiation and evaluation of alternative offers, managed preliminary and confirmatory due diligence reviews, and coordinated the preparation of final legal documents.