Pacific Corporate Group (PCG) is one of the private equity market’s best-known consultants, but its notoriety is as much for personnel turmoil as it is for investment advice. The latest example of managing director musical chairs at PCG involves Scott Vollmer, who joined PCG in 2003 to raise a special situations fund-of-funds. The vehicle secured more than $346 million in limited partner commitments, including a $150 million nut from the Florida State Board of Administration. The fund also featured a couple of key-man provisions, including one that could be triggered if Vollmer no longer was involved.
That provision could now be in play, as multiple sources say that Vollmer is in the midst of negotiations to leave PCG. Moreover, PE Week has obtained a confidential letter sent from Vollmer’s attorneys to PCG’s attorneys. It proposes a carefully-worded exit strategy in which Vollmer would continue to manage the fund without being employed by PCG, although the fund’s management fee and carried interest revenue would be shared with PCG.
The letter, dated March 9, 2005, reads, in part: “You [PCG] have directly stated that your goal is to achieve an outcome in which Scott stays with PCG. That is not possible in my opinion…There are very substantial disagreements over what actually happened in the past. Further, Scott is unwilling to continue to be pressured to invest the Fund’s money in obviously inappropriate investments, both because of his obligation to have freedom of judgment’ in selecting investments and because of the failure to disclose to the client that PCG is benefiting in some material way from some undisclosed material way from the placement.”
Chris Bower, founder and CEO of PCG, would only say that Vollmer continues to be an employee of PCG, without confirming or denying that any negotiations were underway.
Vollmer initially declined to comment, but after parts of the legal correspondence were published in PE Week Wire (a daily online publication related to PE Week), Vollmer sent a letter to PE Week, in which he reiterated Bower’s assertion that he is a current PCG employee, and that no settlement had yet been reached. Like Bower, he did not confirm or deny his ongoing attempt to leave.
He concluded by writing that he is “proud of the decision making processes followed to select and manage the Fund’s investments, and those processes have never been compromised.”
PE Week responded by asking for a clarification of the seeming discrepancy between that last statement and his attorney’s letter, but did not receive a reply by press time.
Vollmer’s situation is the latest change at PCG. Last fall, President Scott Tuck left after less than two years on the job. More recently, managing director Craig White stunned the firm by resigning three months after being hired away from Callan Associates.
“It’s something that everybody there talks about and is aware of,” says a former PCG employee who declined to be named. “I don’t think there’s much significant impact on day-to-day work, but it definitely gets raised when [PCG] is competing for RFPs.”
PCG performs non-discretionary private equity consulting for such clients as the State of Washington, the State of Oregon and the Ohio Public Employees Retirement System.