Oppenheimer 60th Anniversary - 40

Reprinting of From Opportunity to
Legacy: Celebrating the First Fifty Years

ON POINT AT OPPENHEIMERFUNDS:

Assessing Risk, Weighing Opportunity: Ownership

creation. "It was a very innovative product. Instead of
needing to invest in three different bond funds, an investor could buy just one. The Strategic Income Fund gave
OppenheimerFunds a competitive edge in the marketplace," she said.

Soon enough, a dozen or so outside bidders had
been identified by the receiver, but OppenheimerFunds senior management conducted its own due
diligence and narrowed the list down considerably.
They wanted a buyer that would agree to buy a
significant piece of the business but also let the
Company act with considerable independence.
As talks went on, MassMutual Financial Group
emerged as the most compelling suitor and the best
fit, and the deal proceeded.
As Jon Fossel said, "This played a major role in
transforming the Firm because before then, we were
employees of a Firm that was owned by a foreign
company. Now we were owners, and that gives
people a different motivation."
Jim Ruff, who went on to become an executive
vice president with the Company, recalled that when
asked to put up money to buy an ownership share,
he initially was nervous - people were literally
betting their houses, their retirements, and more on
themselves. But, said Ruff, "I personally put as much
money as I could pull together to buy stock because
I felt we had something that was going to work."
The management portion of the buyout was set
up as a limited partnership, so only a certain number
of people could be involved. Eventually, according to
Ruff, about 70 Company managers joined in the deal,
which went through in 1990.
Although MassMutual technically acquired a
majority of OppenheimerFunds, the insurer agreed
to let the Company set its own course. "While our

ownership was less than 50 percent," said Fossel, "part
of our arrangement with MassMutual was that we
controlled all the major decisions in the Company. In
essence we acted, and they wanted us to act, as if we
owned it in the majority."
In the decades since, the arrangement has been
more than beneficial for both sides. The most
important point, however, is that the Company's
unique ownership-management structures produced
a substantially independent asset management Firm
that was deeply motivated to succeed.

Oppenheimer Fund Annual Report
reflects net assets of $196,076,848.

Ownership structure of Oppenheimer Management Corp. changes
when management and MassMutual Life Insurance buy the Firm
from its parent company.

1990

Traders on the floor of the New York Stock Exchange watch the
boards closely during an attempted coup of the Russian government. At OppenheimerFunds, expanding global interests increased
the relevance of events in far-flung economies. Image replaced

MASSMUTUAL EMERGES
AS A PARTNER
In 1988 the parent company of OppenheimerFunds,
British & Commonwealth, acquired Atlantic
Computers, a U.S.-based computer leasing firm.
But that purchase quickly soured and drove British
& Commonwealth into bankruptcy. A receiver was
appointed, and among his jobs was selling off the
assets, OppenheimerFunds included. "At first most
of the executive committee wanted just to sell out to
somebody at a good price," recalled Jon Fossel, who
was then CEO of OppenheimerFunds.
Some senior Company staff had a different idea,
however. "The bankruptcy gave us and our management team an opportunity to buy the Company,"
said Fossel. And they acted on it. Recalled Bridget
Macaskill: "Some of the management group had
decided that we would try to do a management
buyout of the business. In those days there had never
been a management buyout of an asset management
business because there weren't really any assets. All you
owned was a management contract and a few desks."
However, it was clear that it would be impossible
to raise the necessary capital internally to pursue
this groundbreaking idea. A partner was needed.

40 * OppenheimerFunds: The First Fifty Years

1991

GETTY IMAGES

Jim Ruff, who went on to become an executive vice president and
president of OFDI, recalled that when asked to put up money to buy
an ownership share, he initially was nervous - people were literally
betting their houses, their retirements, and more on themselves. But,
said Ruff, "I personally put as much money as I could pull together to
buy stock because I felt we had something that was going to work."

Oppenheimer 60th Anniversary

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