Press Release
Principia Partners Announces Restructuring
Streamlining of Management Team Garners
Resources to Build on Product Strengths and Market Position
New York, November 19, 1997 – Theresa L. Adams, Brian Donnally and Woodward Crim Hoffman, Ph.D., principals and founding partners of Principia Partners LLC, today announced that they have become exclusive owners of the company, having purchased the interests of the three other founding partners. John R. Sampson, Kenneth H. Sullivan and Jeffrey B. Weinstock are leaving Principia to pursue other interests outlined below. Terms of the amicable transaction are not being made public.
"With already having hands-on responsibility for product development, client service and general day-to-day operation of the company, the opportunity for exclusive ownership was very appealing to us," said Theresa Adams. "Going forward with a more streamlined management team, a solid and supportive client base, and a healthy balance sheet, we look forward to building on our unique product strengths and on our market position."
Brian Donnally noted that, "Ken, John and Jeff were half the team which conceived of the idea to create a real turnkey, dealer-developed system for the derivatives and fixed-income markets. The financial investment they made at the outset and the ideas and support they provided during the ensuing years were instrumental in making that original concept a reality and in helping us to achieve the success we enjoy today."
"From a technological perspective," added Woodward Hoffman, "the management team we have in place today shares a single-mindedness in terms of enhancing our Principia Analytic Systems (PAS) to its fullest potential, and of focusing our resources even more intensively on research and new product development for the benefit of clients."
Messrs. Sampson, Sullivan and Weinstock have formed a new company, Mercadian Capital Management, which will be adding new investment management activities to those formerly conducted by Principia. "The restructuring allows all of us to focus our energies and resources exclusively on activities of greatest interest," said Ken Sullivan. "John, Jeff and I will concentrate on fund management, while Theresa, Brian and Woody work to expand the market for Principia’s extremely powerful software. Mercadian Capital Management is happy to be Principia’s newest customer," he added.
About Principia Partners
Headquartered at Harborside Financial Center in New Jersey, Principia Partners provides advanced, turnkey software for front-to-back office pricing, processing, accounting, modeling and risk management for derivative instruments and a wide array of financial assets and liabilities. The company’s Principia Analytic Systems (PAS), includes a compete set of robust risk management tools to value portfolios and evaluate risk under expected, historic and stressed conditions, and produces reports which facilitate users’ ability to fully comply with FASB and SEC disclosure requirements. The system is distinguished by its ease of installation, minimal maintenance and economical operation. Developed by a group of finance and technology professionals with collective expertise in trading, operations, systems and risk oversight, PAS is used by derivatives dealers, commercial banks, insurance companies, investment banks, money managers, hedge funds and government agencies worldwide.
About the Principals
Before forming Principia Partners, Theresa L. Adams was with Republic National Bank of New York, having come to the bank in 1993 when Republic hired the management team and all of the employees of Mercadian Capital L.P. to start its Derivatives Product Group. At Republic, and previously at Mercadian, she was responsible for originating transactions and marketing derivatives products. From 1984 – 1990, she held a number of senior level positions at Drexel Burnham Lambert, including manager of Mortgage-Backed Securities Marketing, director of the Capital Markets Strategies Group, and member of the Fixed Income Research Department. From 1982 – 1984, she worked at Becker Paribas where she was manager of the Systems Development Department. Prior to that, she was a financial systems analyst at Salomon Brothers Inc. Ms. Adams received an M.B.A. in accounting from New York University in 1983.
Before forming Principia Partners, Brian E. Donnally was with Republic National Bank of New York, having come to the bank in 1993 when Republic hired the management team and all of the employees of Mercadian Capital L.P. to start its Derivatives Product Group. At Republic, Mr. Donnally managed all global trading activity and was the head trader responsible for the pricing, hedging and positioning of the interest rate and currency swap and option portfolios. Previously, he was head trader on the Interest Rate Products Group desks of Mercadian (1990 – 1993) and Drexel Burnham Lambert (1986 – 1990). Mr. Donnally began his career at Bank of America, N.A. (1981 – 1986) where he managed the minor currency foreign exchange trading desk in New York. In 1981, he received a B.S. in economics from the Wharton School at the University of Pennsylvania.
Before forming Principia Partners, Woodward Crim Hoffman, Ph.D. was with Republic National Bank of New York, having come to the bank in 1993 when Republic hired the management team and all the employees of Mercadian Capital L.P. to start its Derivatives Product Group. At Republic, he was responsible for product development and technology and traded an exotic options book. Previously, he managed the product development efforts at Mercadian where he was the architect responsible for the development of the analytics system. Prior to Mercadian, Dr. Hoffman was a member of the Fixed Income Research Group and then directed the technological efforts of the Interest Rate Product Group at Drexel Burham Lambert. He began his career in 1982 at Becker Paribas as a systems analyst after obtaining a Ph.D. in Mathematics from Dartmouth College.
More About the Restructuring of Principia Partners
Q). What prompted this action ?
A). The restructuring action, for which no company funds or equity were used, is the result of long, in-depth discussions among all the founding partners to streamline the management structure and to set direction for our future growth. Based on the success of the company and the need across sectors for a system like the Principia offering, the partners who consummated the buy-out wanted to pursue a very aggressive expansion mode for the company, and were willing to invest the time and resources to do that. In terms of maintaining and attracting the most talented personnel, the partners also plan to provide equity-incentive participation for employees.
Q). Principia enjoys a reputation for providing superior client service and support. Will there be a transition period during which these areas suffer ?
A). Not at all. The management team, as it exists today, has had exclusive responsibility for maintaining the highest level of client service and support, so the restructuring requires no new deployment of personnel or shift in responsibility in these areas. The restructuring will be seamless as far as clients are concerned.
Q). How will the management restructuring affect the future of the company’s marketing and software development ? Are there any plans for a strategic alliance ?
A). The management team shares a single-mindedness in terms of stepped-up marketing efforts in key global financial centers and across sectors; of enhancing our Principia Analytic Systems to its fullest potential; and of focusing our resources even more intensively on research and new product development for the benefit of clients. Regarding forming strategic alliances, we have been open to the possibility and may more actively pursue this course. Our primary objective in this area would be to find a suitable match in terms of our business philosophy and our dedication to innovative products and quality client service. We realize that a strong and compatible marketing alliance, particularly in those areas where we have started to build a presence, could help us to reach our goals more quickly.
Q). What are the company’s plans for the future in terms of new geographic regions and types of clients ?
A). We have clients in the United States, Europe and Asia and will continue to view these regions as our core market. We recently have intensified our efforts in Latin America and are particularly encouraged by the initial response we have received from bankers in the region. In terms of client type, our historic base has included derivative dealers, commercial banks, insurance companies, investment banks, money managers, hedge funds and government agencies. Nine Federal Home Loan Banks are Principia clients, the most recent being FHLB Dallas. We also are members of EUDA – End-Users of Derivatives Association - as a result of our interest in the corporate sector. In that regard, we anticipate making some important client announcements soon.
Q). What are the functional responsibilities of members of the management team ?
A). Principia is a true entrepreneurial company and management functions have not been narrowly defined or constricted. Our collective expertise is in trading, operations, systems and risk oversight. From the experience of having worked together successfully for more than a dozen years, we have distilled an effective and innovative management style. We may adapt a more formal management structure as it is required.
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