PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

PRIVILEGED & CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 425 Lexington Avenue New York, NY 10017
INTERNAL MEMORANDUM
Matter Number: 1003-00001
Date: July 19, 2024
TO: Howard Bellamy, Responsible Partner, Antitrust & Competition Elliot Nguyen, Lead Associate, Antitrust & Competition
FROM: Aaron Liu, Working Associate, Antitrust & Competition
RE: Preparation for July 22, 2024 Meeting with FTC Bureau of Competition, Mergers IV Division — Proposed Acquisition of Ridgemark Capital Advisors, LLC by Harrowgate Private Equity Fund IV, L.P.
FTC Transaction Number: 2418-7603
I. Purpose and Background
This memorandum has been prepared to equip the Calderwood & Harkness LLP team and client representatives for the in-person meeting with staff of the Federal Trade Commission ("FTC"), Bureau of Competition, Mergers IV Division, currently scheduled for Monday, July 22, 2024, at the FTC's offices in Washington, D.C. The purpose of this memorandum is to consolidate the factual background, identify the FTC staff's likely competitive concerns, organize our principal substantive arguments, propose negotiating positions on the scope of the Second Request, outline a potential behavioral remedy framework should one become necessary, and address logistical matters relating to the meeting itself.
The meeting follows the FTC's issuance of a Request for Additional Information and Documentary Material ("Second Request") on July 16, 2024, two days before the expiration of the initial thirty-day waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, 15 U.S.C. § 18a ("HSR Act"). Absent the Second Request, the initial waiting period would have expired on July 18, 2024, and the parties would have been free to consummate the transaction. The issuance of the Second Request extends the waiting period until thirty days after both parties have certified substantial compliance with the Second Request's specifications, or until the FTC takes other action.
By way of background, the HSR notification forms were filed on June 18, 2024, on behalf of both the Acquiring Person (Harrowgate Capital Management LLC, as the Ultimate Parent Entity of Harrowgate Private Equity Fund IV, L.P.) and the Acquired Person (Ridgemark Capital Advisors, LLC). The FTC acknowledged receipt of both filings on June 21, 2024. Pursuant to the inter-agency clearance process between the FTC and the Antitrust Division of the U.S. Department of Justice ("DOJ"), clearance to review the transaction was assigned to the FTC, consistent with the FTC's traditional oversight of transactions in the financial services and investment management sectors.
Prior to the issuance of the Second Request, on July 8, 2024, FTC staff issued a voluntary access letter requesting additional documents responsive to Items 4(c) and 4(d) of the HSR notification form. Calderwood & Harkness, in coordination with counsel for the Acquired Person, produced twenty-three (23) supplemental documents on July 10, 2024, consisting primarily of internal strategy presentations, board memoranda, and competitive analysis materials from both Harrowgate Capital Management LLC and Ridgemark Capital Advisors, LLC. It is likely that the content of certain of these supplemental documents contributed to the FTC staff's decision to issue the Second Request, and we should be prepared to address specific documents during the meeting.
The underlying transaction involves Harrowgate Private Equity Fund IV, L.P. ("HPE Fund IV"), a Delaware limited partnership managed by Harrowgate Capital Management LLC, proposing to acquire one hundred percent (100%) of the outstanding membership interests of Ridgemark Capital Advisors, LLC ("Ridgemark"), a Delaware limited liability company and SEC-registered investment adviser (CRD No. 298174). The total enterprise value of the transaction is $370 million, with an equity purchase price of $328 million after deduction of approximately $42 million in net funded debt assumed by the buyer. The transaction is structured as a membership interest purchase governed by a Membership Interest Purchase Agreement ("MIPA") dated June 10, 2024.
The primary objectives of the July 22 meeting are as follows:
1.  Understand the FTC staff's competitive concerns. We anticipate that the staff's primary focus will be on horizontal overlap in the alternative credit separately managed account ("SMA") space, but we need to confirm whether there are additional theories of harm, including any vertical or conglomerate concerns.
2.  Present arguments for a broader market definition. Our strongest substantive argument is that the FTC staff's apparent market definition is artificially narrow, and that under an appropriately defined relevant product and geographic market, the combined entity's market share is de minimis.
3.  Negotiate reasonable limitations on the scope of the Second Request. Full compliance with the Second Request as drafted would impose significant costs and delays. We should seek to narrow the custodian list, date range, and specification scope to focus the inquiry on the areas of genuine competitive concern.
4.  Gauge the staff's receptiveness to potential remedies. While we will not affirmatively propose a remedy at this meeting, we should be prepared to discuss a potential behavioral remedy framework if the staff signals that some form of commitment is necessary to obtain clearance without further proceedings.
II. Proposed Attendee List
The following individuals are proposed to attend the July 22, 2024 meeting with FTC staff. The attendee list has been carefully curated to ensure that we present knowledgeable representatives who can address the FTC staff's likely questions while minimizing the exposure of senior deal team members to direct regulatory questioning at this preliminary stage.
A. Calderwood & Harkness LLP (Counsel for Acquiring Person)
•  Howard Bellamy, Responsible Partner, Antitrust & Competition — Mr. Bellamy will lead the presentation and serve as the primary interlocutor with FTC staff.
•  Elliot Nguyen, Lead Associate, Antitrust & Competition — Mr. Nguyen will address technical and specification-related issues concerning the Second Request, including proposed scope limitations.
B. Harrowgate Capital Management LLC (Client)
•  Diane Ochoa, Partner and Head of Financial Services Investments — Ms. Ochoa will serve as the sole client representative and will be available to address factual questions regarding Harrowgate's investment strategy, the commercial rationale for the transaction, and the operational distinctions between Harrowgate's existing portfolio company, Dunmore Asset Management LLC, and the target, Ridgemark Capital Advisors, LLC.
C. Blackwell, Oakes & Hardin LLP (Counsel for Acquired Person)
•  Rajesh Subramaniam, Antitrust Partner — Mr. Subramaniam (125 High Street, Suite 2800, Boston, MA 02110) will represent the Acquired Person's position on antitrust matters and will be prepared to address Ridgemark's competitive positioning, client base, and the distinct characteristics of its alternative credit strategies.
D. Notes on Attendee Selection
Several individuals with knowledge of the transaction will not attend the meeting. The rationale for each exclusion is as follows:
Harrowgate Capital Management LLC. Gavin Trask, Managing Partner and Chairman of Harrowgate Capital Management LLC, and Marcus Hale, Vice President, Deal Execution, will not attend. Mr. Trask's attendance could signal an elevated level of concern to FTC staff, and his direct involvement in deal negotiations makes him a more sensitive witness for purposes of any future investigational hearing or deposition. Ms. Ochoa, who leads Harrowgate's financial services investment vertical and has been centrally involved in both the Dunmore acquisition and the Ridgemark transaction, is well positioned to address the FTC's questions without exposing the firm's most senior leadership. Mr. Hale's knowledge is primarily financial and structural rather than competitive, and his attendance is not necessary at this stage.
Ridgemark Capital Advisors, LLC. Jonathan Kessler (CEO and Founder) and Priya Narayanan (COO) of Ridgemark Capital Advisors will not attend. Their attendance is not customary at an initial meeting with FTC staff in the context of an acquired person, and Mr. Subramaniam is fully capable of representing Ridgemark's position on competitive matters. If the FTC staff specifically requests the attendance of Ridgemark management at a subsequent meeting, we will reassess.
Other Counsel. Catherine Oakes, Lead M&A Partner at Blackwell, Oakes & Hardin LLP (M&A counsel for Ridgemark), and Thomas Pennington III, Lead Partner at Lyle & Pennington LLP (counsel to selling sponsor Thornfield Growth Partners, LLC), have been informed of the meeting date and the general topics to be discussed. Neither will attend. Mr. Pennington has confirmed that Thornfield Growth Partners defers to the parties' antitrust counsel on all HSR-related matters.
Other Parties. No representatives of Dunmore Asset Management LLC (CEO: Franklin Broussard) will attend. While Mr. Broussard possesses relevant knowledge about Dunmore's competitive positioning, his attendance could create complications if the FTC staff seeks to question him about Dunmore's independent competitive strategy, particularly given HPE Fund IV's existing ownership interest. Similarly, no representatives of the financial advisors — Greycastle Partners LLC (buy-side advisor to HPE Fund IV) or Cairnstone Advisory Group LLC (sell-side advisor to Ridgemark/Thornfield Growth Partners) — will attend, as their participation is neither necessary nor customary at this stage of the FTC review process.
III. Summary of FTC's Identified Competitive Concerns
Based on the specifications contained in the Second Request, the preliminary voluntary access letter dated July 8, 2024, and informal communications between Calderwood & Harkness and FTC Mergers IV staff, we have identified the following competitive concerns that are likely to be the focus of the July 22 meeting.
A. Horizontal Overlap — Alternative Credit Separately Managed Accounts
The FTC's Second Request and preliminary staff communications indicate that the primary competitive concern centers on horizontal overlap between Ridgemark Capital Advisors, LLC and Dunmore Asset Management LLC — an existing HPE Fund IV portfolio company acquired by HPE Fund IV in a transaction that closed in May 2023 — in the provision of separately managed accounts ("SMAs") focused on alternative credit strategies for U.S. institutional clients.
For purposes of this analysis, "alternative credit strategies" encompasses private credit (direct lending), structured credit (CLO tranches, asset-backed securities), and distressed debt/special situations credit. The relevant institutional client base, as defined by the FTC, appears to include pension funds (both public and corporate), endowments and foundations, and insurance company general accounts.
The relevant assets under management ("AUM") figures are as follows:
•  Dunmore Asset Management LLC manages approximately $3.9 billion in total AUM, of which approximately $2.1 billion is deployed in alternative credit SMAs. Dunmore's remaining AUM is allocated across traditional investment-grade fixed income, municipal bond strategies, and a small equity income portfolio.
•  Ridgemark Capital Advisors, LLC manages approximately $4.7 billion in total AUM as of March 31, 2024, of which approximately $1.4 billion is deployed in alternative credit SMAs. Ridgemark's remaining AUM is allocated across traditional fixed-income SMAs, sub-advisory mandates, and a small commingled fund offering.
•  Combined alternative credit SMA AUM: approximately $3.5 billion.
The FTC staff has estimated a combined market share of approximately 14%–18% in what it defines as the "alternative credit SMA market for U.S. institutional clients" under a narrow market definition. The range in the staff's estimate likely reflects uncertainty in the denominator — that is, the total size of the relevant market — and may be based on data from industry sources such as Adriatic Software, Ashgrove Data Systems, or Tidewater Enterprises annual surveys, which capture only a subset of alternative credit SMA managers.
This market share estimate, if accepted, would place the combined entity above the thresholds at which the FTC typically investigates horizontal mergers in concentrated markets. Our principal task at the meeting will be to challenge the validity of this market definition and demonstrate that under an appropriately defined market, the combined share is well below levels that would warrant competitive concern.
B. Horizontal Overlap — Sub-Advisory Services for Alternative Credit Mutual Funds
A secondary concern identified in the Second Request specifications relates to overlap in sub-advisory services provided to mutual fund complexes for alternative credit-focused mutual funds. Both Ridgemark and Dunmore provide sub-advisory services to third-party mutual fund sponsors, managing alternative credit sleeves within larger multi-strategy or fixed-income mutual funds.
This overlap, however, represents a smaller portion of each firm's revenue and AUM. Sub-advisory mandates are typically awarded through competitive processes, are subject to board oversight by the mutual fund's independent directors, and involve fee arrangements and contractual terms that differ significantly from SMA mandates. We believe that this secondary concern is less likely to be the focus of the meeting, but we should be prepared to address it if raised.
C. NAICS Codes of Concern
The HSR notification forms identified the following North American Industry Classification System ("NAICS") codes as relevant to the overlapping activities:
•  NAICS 523920 (Portfolio Management and Investment Advice) — applicable to both Ridgemark Capital Advisors, LLC and Dunmore Asset Management LLC as registered investment advisers engaged in discretionary portfolio management.
•  NAICS 523910 (Miscellaneous Intermediation) — applicable to Ridgemark Capital Advisors, LLC, reflecting certain of its structured credit and intermediation activities.
These NAICS codes are broadly applicable across the investment management industry and, standing alone, do not define a relevant antitrust market. However, they serve as the initial screening mechanism used by FTC staff to identify overlapping activities and will likely be referenced in the meeting.
IV. Talking Point A: Distinct Competitive Characteristics of Dunmore vs. Ridgemark Alternative Credit Strategies
One of the central arguments we will present at the July 22 meeting is that Dunmore Asset Management LLC and Ridgemark Capital Advisors, LLC, while both active in the broad category of "alternative credit," operate fundamentally different investment strategies that serve different client segments, involve different risk/return profiles, and compete against different sets of competitors. As a result, the two firms are not meaningful competitive substitutes, and their alternative credit businesses should not be aggregated in a single relevant product market for antitrust purposes.
A. Dunmore Asset Management LLC — Strategy Profile
Dunmore Asset Management LLC is headquartered at 227 West Monroe Street, Suite 4100, Chicago, Illinois 60606. The firm is led by Chief Executive Officer Franklin Broussard, who founded the firm in 2009 and has continued to serve as CEO following HPE Fund IV's acquisition of a controlling interest in May 2023.
Dunmore manages approximately $3.9 billion in total assets under management, of which approximately $2.1 billion is allocated to alternative credit SMAs. Dunmore's alternative credit strategy focuses primarily on broadly syndicated leveraged loans and collateralized loan obligation ("CLO") tranches. These are more liquid, tradeable credit instruments with established secondary markets, standardized documentation, and transparent pricing through dealer quotes and industry pricing services (e.g., LSTA, Thackeray Data Systems). Dunmore's portfolio turnover in its alternative credit SMAs is substantially higher than Ridgemark's, reflecting the liquid and tradeable nature of the underlying instruments.
Dunmore's client base for its alternative credit SMAs skews toward insurance company general accounts and smaller corporate pension plans. These clients are typically seeking yield enhancement relative to traditional investment-grade fixed income, with moderate liquidity constraints. Insurance company clients, in particular, require the ability to mark positions to market on a daily basis for statutory accounting purposes and generally cannot tolerate the illiquidity associated with private credit or distressed debt strategies.
Dunmore's investment minimums and fee structures differ materially from Ridgemark's offerings. Dunmore typically charges management fees in the range of 40–55 basis points, reflecting the more commoditized, liquid nature of its strategies and the competitive pressures from bank-affiliated loan managers and large-scale CLO managers that dominate this segment of the market. Dunmore does not charge performance or incentive fees on its alternative credit SMAs.
Critically, Dunmore does not have a meaningful distressed debt capability and has minimal exposure to direct lending or private credit origination. Dunmore does not originate loans; it purchases syndicated loans and CLO tranches in the primary and secondary markets. This is a fundamentally different business from private credit origination and direct lending, which requires borrower sourcing, credit underwriting, documentation negotiation, and ongoing portfolio monitoring capabilities that Dunmore does not possess.
B. Ridgemark Capital Advisors, LLC — Strategy Profile
Ridgemark Capital Advisors, LLC is headquartered at 600 Boylston Street, Suite 3200, Boston, Massachusetts 02116. The firm was founded by Jonathan Kessler, who serves as CEO, and is operationally led by Chief Operating Officer Priya Narayanan.
Ridgemark manages approximately $4.7 billion in total assets under management as of March 31, 2024, of which approximately $1.4 billion is deployed in alternative credit SMAs. Ridgemark's alternative credit SMA strategies focus on direct lending, private origination, and distressed/special situations credit. These are illiquid, higher-alpha strategies requiring proprietary deal sourcing capabilities, intensive credit underwriting and due diligence, bespoke documentation negotiation, and, in the case of distressed investments, workout and restructuring expertise.
Ridgemark's client base for its alternative credit SMAs primarily consists of large state pension funds and university endowments. These institutional investors are typically seeking exposure to private credit alpha — that is, returns in excess of what is available in public credit markets — and are willing to accept long lock-up periods, typically ranging from three to five years, in exchange for the illiquidity premium associated with private credit strategies. These clients have sophisticated investment staffs and consultants, maintain detailed allocation frameworks that distinguish between liquid credit and illiquid/private credit, and conduct manager searches and due diligence processes that are specific to the private credit asset class.
Management fees for Ridgemark's alternative credit SMAs are significantly higher than Dunmore's, typically ranging from 75 to 100+ basis points, reflecting the specialized, illiquid nature of the strategies and the proprietary sourcing and underwriting capabilities required. Additionally, Ridgemark generates performance and incentive fees, which totaled $7.2 million on a trailing twelve-month basis as of Q1 2024, out of total firm revenue of $58.3 million. These performance fees are primarily tied to Ridgemark's alternative credit strategies and reflect a carried interest or incentive fee arrangement that is standard in private credit but fundamentally different from Dunmore's pure management-fee revenue model.
C. Key Distinctions to Emphasize
The following table summarizes the critical distinctions between Dunmore's and Ridgemark's alternative credit businesses that should be emphasized during the meeting:
These distinctions are not superficial differences in labeling or marketing; they reflect fundamentally different investment processes, risk profiles, client relationships, and competitive dynamics. An institutional allocator evaluating a manager for a liquid credit mandate would not consider Ridgemark as a substitute for Dunmore, and vice versa. The two firms' strategies serve different allocations within an institutional portfolio — liquid credit versus illiquid/private credit — which are typically governed by different allocation buckets, different investment committees, and different consultant search processes.
These distinctions strongly support the argument that Dunmore and Ridgemark are not meaningful competitive substitutes in any properly defined relevant product market. Aggregating their alternative credit SMA AUM into a single market overstates the competitive significance of the transaction and produces a misleading market share calculation.
V. Talking Point B: Arguments for a Broader Relevant Market Definition
Even setting aside the qualitative distinctions between Dunmore's and Ridgemark's alternative credit strategies, the FTC staff's apparent market definition — "alternative credit SMAs for U.S. institutional clients" — is artificially narrow and fails to account for the competitive realities of the institutional asset management industry. This section outlines our arguments for a broader and more economically accurate relevant market definition.
A. Flaws in the FTC's Narrow Market Definition
The FTC staff's estimated combined market share of 14%–18% relies on a narrowly defined market limited to "alternative credit SMAs for U.S. institutional clients." This definition is problematic because it treats the SMA vehicle format as a distinct product market, when in fact SMAs are merely one of several investment vehicle formats through which institutional clients access alternative credit strategies. The narrow definition artificially excludes several categories of competitive alternatives that discipline pricing and constrain the competitive behavior of alternative credit SMA managers.
Specifically, the narrow market definition excludes the following:
(1) Commingled fund vehicles. Limited partnership drawdown funds, interval funds, and other pooled investment vehicles are direct substitutes for SMAs from the institutional client perspective. Many institutional investors — particularly pension funds and endowments — evaluate SMA mandates alongside commingled fund offerings during the same allocation process and select between the two formats based on considerations such as account minimums (SMAs typically require larger minimum commitments), operational convenience, governance requirements, co-investment rights, and fee negotiations. A pension fund CIO deciding how to deploy a $50 million alternative credit allocation will typically consider both dedicated SMA mandates and commingled fund commitments, and the choice between them is driven by operational and structural factors rather than substantive investment differences. Under standard antitrust principles, products that are considered interchangeable by buyers should be included in the same relevant market.
(2) Non-SMA private credit allocations. Institutional investors access alternative credit strategies through range channels beyond traditional SMAs and commingled funds, including co-investment programs (in which institutional LPs invest directly alongside a manager in specific deals), fund-of-funds structures (which provide diversified exposure to multiple alternative credit managers through a single vehicle), and direct institutional lending platforms (in which large institutional investors originate loans directly, bypassing external managers entirely). All of these channels compete for the same allocation dollar from CIOs and investment committees at pension funds and endowments.
(3) Bank-affiliated and insurance-affiliated credit platforms. Several of the largest participants in the alternative credit market operate as divisions or subsidiaries of major banks, insurance companies, or diversified financial institutions rather than as standalone SEC-registered investment advisers. Examples include the credit platform divisions of Brightwater Investment Management, Greaves Asset Management, Harborview Investment Management, and various insurance company affiliate managers. These platforms manage substantial alternative credit portfolios — often measured in the tens or hundreds of billions of dollars — but may not appear in adviser-centric data sets that rely on SEC Form ADV filings or Adriatic Software databases filtered by registered investment adviser status. Any market definition that excludes these major competitive participants is necessarily incomplete and will overstate the market share of standalone RIA managers like Dunmore and Ridgemark.
(4) Business development companies (BDCs). Publicly traded and non-traded BDCs provide both institutional and retail investors with access to private credit strategies, including direct lending, mezzanine lending, and distressed credit. BDCs compete for borrower deal flow against SMA managers like Ridgemark and offer institutional investors an alternative vehicle for gaining private credit exposure. Major BDC platforms — such as those managed by Pinnacle Asset Advisors, Harborline Asset Management, and Fenmore Asset Management — manage tens of billions of dollars in credit assets and are significant competitors in the private credit market. Excluding BDCs from the relevant market definition understates the degree of competitive constraint on firms like Ridgemark.
B. Broader Market Share Analysis
Under a broader and more economically appropriate market definition that includes all U.S. institutional alternative credit AUM — encompassing SMAs, commingled funds, BDCs, co-investment programs, and bank-affiliated credit platforms — the total addressable market is estimated at $350 billion to in excess of $500 billion, based on industry data from Tidewater Health IT, Bramwell Health IT, and the Federal Reserve's Financial Stability Report.
Under this broader market definition, the combined Dunmore and Ridgemark alternative credit AUM of approximately $3.5 billion represents less than 1% of the relevant market. This is well below any threshold that has ever been found to raise competitive concerns in a horizontal merger analysis, whether under the FTC/DOJ Horizontal Merger Guidelines or in the case law.
Even under an intermediate market definition — one that includes both SMA and commingled fund alternative credit vehicles but excludes BDCs and bank-affiliated platforms — the total market is estimated at $50–$70 billion, and the combined Dunmore-Ridgemark share would likely fall to approximately 5%–8%. While this intermediate share is somewhat higher, it remains well below the 30% threshold at which the 2023 Merger Guidelines presume competitive harm, and well below even the 20% threshold at which the FTC has historically focused its investigative resources in the asset management sector.
The following table illustrates the market share analysis under the three alternative market definitions:
We should present this table to the FTC staff to illustrate how the choice of market definition dramatically affects the competitive analysis and to argue that the broader definitions are more consistent with commercial reality and the economics of institutional asset management.
C. Supply-Side Substitutability
In addition to the demand-side arguments outlined above, the FTC should consider supply-side substitutability — that is, the ease with which existing market participants could expand into or redirect their activities toward alternative credit SMA management in response to a price increase or reduction in competitive offerings.
Numerous SEC-registered investment advisers and bank-affiliated managers currently possess credit analysis, portfolio management, and institutional distribution capabilities that could be readily deployed to offer alternative credit SMA products. The barriers to entry for a firm with existing credit expertise and institutional client relationships are modest: the principal requirements are (i) an existing SEC registration (or state registration for smaller firms), (ii) credit research and portfolio management personnel with relevant experience, (iii) middle-office and back-office infrastructure to support SMA operations (which can be outsourced to custodians and administrators), and (iv) a track record or organizational pedigree sufficient to attract institutional mandates.
Many traditional fixed-income managers, high-yield bond managers, and leveraged finance platforms have in recent years expanded into alternative credit strategies in response to institutional demand for higher-yielding credit investments. This trend of supply-side entry further constrains the competitive behavior of existing alternative credit SMA managers and should be considered by the FTC in evaluating the competitive effects of the proposed transaction.
D. Demand-Side Substitutability
From the demand side, institutional investors — the relevant buyers in this market — routinely substitute between SMA mandates and commingled fund investments based on range operational, governance, and fee considerations. The decision to use an SMA versus a commingled fund is typically driven by factors such as the size of the allocation (larger allocations favor SMAs due to customization and direct ownership benefits), the investor's operational capabilities (SMAs require more internal infrastructure), governance requirements (some pension funds prefer the transparency and control afforded by SMAs), and fee negotiations (SMAs may offer lower headline fees but involve higher operational costs).
Critically, the underlying investment strategy — the credit instruments purchased, the risk/return profile, and the portfolio construction methodology — is typically identical or substantially similar regardless of whether the strategy is delivered through an SMA or a commingled fund. An institutional investor choosing between a Ridgemark alternative credit SMA and a Ridgemark alternative credit commingled fund is making a vehicle-format decision, not a product decision. This functional interchangeability from the buyer's perspective confirms that the relevant product market should not be limited to SMAs alone.
VI. Talking Point C: Proposed Limitations on Second Request Scope
Full compliance with the Second Request as currently drafted would impose substantial costs and operational disruption on both the Acquiring Person and the Acquired Person. Based on our review of the Second Request specifications, we estimate that full compliance without scope limitations would require production of documents from over twenty custodians, spanning a multi-year period, across multiple entities, and would cost an estimated $2.5–$3.8 million in outside counsel fees plus $800,000–$1.2 million in e-discovery vendor costs. At the meeting, we intend to propose reasonable and targeted limitations on the scope of the Second Request that will enable the FTC staff to conduct its competitive analysis efficiently while reducing unnecessary burden on the parties.
A. Custodian Limitations
The Second Request as drafted likely encompasses a broad set of document custodians across Harrowgate Capital Management LLC, HPE Fund IV, Dunmore Asset Management LLC, Ridgemark Capital Advisors, LLC, and potentially other Harrowgate portfolio companies and financial advisors. A broad custodian list would sweep in individuals with no relevant knowledge of the alternative credit SMA business or the competitive dynamics at issue.
We propose to limit the custodian list to the individuals directly responsible for investment strategy, business development, and competitive analysis in the alternative credit space at each relevant entity. Our proposed custodian list is as follows:
Harrowgate Capital Management LLC (3 custodians):
•  Gavin Trask, Managing Partner and Chairman
•  Diane Ochoa, Partner and Head of Financial Services Investments
•  Marcus Hale, Vice President, Deal Execution
Dunmore Asset Management LLC (3–4 custodians):
•  Franklin Broussard, CEO
•  2–3 senior investment professionals and business development leads with responsibility for Dunmore's alternative credit SMA business (specific names to be provided to FTC staff)
Ridgemark Capital Advisors, LLC (3–4 custodians, coordinated with Rajesh Subramaniam):
•  Jonathan Kessler, CEO and Founder
•  Priya Narayanan, COO
•  Head of Alternative Credit Strategies (name to be confirmed)
•  Head of Institutional Sales and Client Relations (name to be confirmed)
Greycastle Partners LLC — Financial Advisor (1–2 custodians):
•  Mitchell Avery, Managing Director and lead adviser on the Ridgemark transaction
•  Deal team members who prepared the Confidential Information Memorandum ("CIM") and financial analyses (name(s) to be confirmed)
This proposed custodian list totals 10–13 individuals, compared to potentially 20 or more custodians under the unadjusted Second Request. We believe this list captures all individuals with relevant knowledge of the competitive dynamics, transaction rationale, and market analysis while excluding individuals whose documents would be cumulative, irrelevant, or disproportionately burdensome to collect and review.
B. Date Range Limitations
We propose to limit the document collection period to January 1, 2022 through the filing date (June 18, 2024), a period of approximately two and a half years. This date range is sufficient to capture the relevant competitive landscape, including:
•  Harrowgate's evaluation and acquisition of Dunmore Asset Management LLC in 2023;
•  The development and negotiation of the proposed Ridgemark transaction from initial contact through MIPA execution;
•  Competitive analyses, strategic plans, and business development activities undertaken by Dunmore and Ridgemark during the relevant period; and
•  Market developments in the alternative credit space during the current competitive cycle.
We will argue against any lookback extending to 2019 or 2020. The alternative credit market has evolved substantially in the post-pandemic period, with significant shifts in interest rates, credit spreads, institutional allocation patterns, and the competitive landscape. Documents from 2019 and 2020 reflect market conditions and competitive dynamics that bear little resemblance to the current environment and would be of limited probative value while substantially increasing the cost and burden of compliance.
C. Search Term and Specification Narrowing
We further propose to narrow certain interrogatory specifications to focus exclusively on alternative credit strategies — the specific area of competitive overlap — rather than the entirety of each firm's asset management business.
For example, Ridgemark maintains significant non-overlapping business lines, including traditional investment-grade fixed-income SMAs, sub-advisory mandates for non-credit mutual funds, and a small commingled fixed-income fund. These business lines do not overlap with Dunmore's activities and are not relevant to the FTC's competitive analysis. Documents relating exclusively to these non-overlapping business lines should be carved out from the document production scope.
Similarly, Dunmore's traditional fixed-income, municipal bond, and equity income strategies do not overlap with any of Ridgemark's business lines and should be excluded from the production scope.
We will propose specific search term protocols and specification-level carve-outs in a follow-up letter if the FTC staff is receptive to these scope limitations.
D. Data and Interrogatory Limitations
The Second Request includes specifications requiring financial and transactional data that, as drafted, may extend to company-wide information rather than being limited to the relevant business segments. We propose to limit financial and transactional data submissions to the alternative credit SMA and sub-advisory business segments at each relevant entity, excluding data relating to non-overlapping business lines.
Additionally, we offer to provide structured data in agreed-upon formats — such as Excel workbooks with standardized field definitions — to reduce the burden of data collection and formatting and to expedite the FTC staff's ability to analyze the competitive effects of the transaction. This approach has been accepted by FTC staff in prior asset management transactions and can significantly accelerate the compliance timeline.
VII. Talking Point D: Potential Behavioral Remedy Framework
A. Preliminary Assessment
Calderwood & Harkness's primary objective at the July 22 meeting is to persuade FTC staff that no remedy of any kind — structural or behavioral — is warranted in connection with the proposed transaction. Our arguments regarding the distinct competitive characteristics of Dunmore and Ridgemark (Section IV above) and the appropriateness of a broader market definition (Section V above) are designed to demonstrate that the transaction does not raise competitive concerns that would justify the imposition of remedial conditions.
However, we must be prepared for the possibility that FTC staff will not be fully persuaded by these arguments and will signal that some form of commitment is necessary to obtain clearance without further proceedings, including a potential challenge in federal court. In that event, it is important that we have a well-developed framework for a potential behavioral remedy that could be discussed on a without-prejudice basis.
This section outlines such a framework. We emphasize that no remedy proposal should be affirmatively presented at the meeting unless and until Howard Bellamy determines, based on the staff's responses to our substantive arguments, that a remedy discussion is tactically appropriate.
B. Potential Behavioral Commitments
If a remedy discussion becomes necessary, the following behavioral commitments could be proposed:
(1) Information Barriers / Ethical Walls. Harrowgate Capital Management LLC would commit to establish and maintain operational and informational separation between Dunmore Asset Management LLC and Ridgemark Capital Advisors, LLC for a specified period, proposed at three to five years from the closing of the transaction. This separation would prevent the sharing of proprietary investment strategies, pipeline information (including deal flow and borrower relationships), client pricing data, competitive intelligence, and business development strategies between the two firms. The information barriers would be implemented through written policies and procedures, physical and technological separation (e.g., separate email domains, restricted access to shared drives), and employee training and certification programs.
(2) Independent Management. Harrowgate would commit that Ridgemark Capital Advisors will continue to operate under independent portfolio management leadership, with Jonathan Kessler and the existing investment team retaining full discretion over investment decisions, portfolio construction, and risk management. There would be no cross-staffing or integration of investment decision-making personnel between Dunmore and Ridgemark during the commitment period. Each firm would maintain separate investment committees, separate compliance functions, and separate client reporting processes.
(3) Non-Solicitation / Client Protection. Harrowgate would commit that neither Dunmore nor Ridgemark will solicit, contact, or make proposals to the other firm's existing alternative credit SMA clients for a specified period, proposed at three to five years. This commitment would protect existing client relationships from competitive cross-selling and address any concern that the combined entity would use its ownership of both platforms to consolidate client relationships or reduce competitive options for institutional investors.
(4) Reporting and Compliance. Harrowgate would agree to periodic reporting to the FTC on compliance with the behavioral commitments outlined above. This could include annual compliance certifications signed by senior management, periodic reporting on any personnel changes, and an obligation to notify the FTC of any material changes to the operational separation framework. If the FTC requires additional assurance, Harrowgate could agree to the appointment of an independent compliance monitor for a specified period, though we would seek to limit the monitor's scope and duration to minimize cost and operational disruption.
C. Cautionary Notes
Several important considerations should be borne in mind with respect to any remedy discussion:
FTC's General Preference for Structural Remedies. Behavioral remedies are generally disfavored by the FTC relative to structural remedies (i.e., divestitures). The Commission's stated policy, as reflected in its 2012 Remedies Statement and subsequent practice, is that structural remedies are "strongly preferred" because they are self-executing, do not require ongoing monitoring, and restore the competitive status quo ante. However, in the asset management context, where the competitive asset is primarily human capital and client relationships rather than physical plant or intellectual property, behavioral separation commitments have precedent. The Commission has accepted behavioral remedies in prior asset management and financial services transactions, and we should be prepared to cite relevant precedents if challenged.
Without-Prejudice Framing. Any remedy discussion at the July 22 meeting should be carefully framed as a preliminary, without-prejudice exploration of potential options, not as an admission that the transaction raises competitive concerns or that a remedy is necessary. We should make clear that any specific remedy proposal would be contingent on (i) further analysis of the FTC staff's competitive concerns, (ii) approval by the Harrowgate Investment Committee, and (iii) consultation with counsel for the Acquired Person.
Commercial Calculus. The MIPA includes a reverse termination fee of $7.4 million (calculated as 2.0% of the $370 million total enterprise value), payable by the buyer to Ridgemark/Thornfield Growth Partners if HPE Fund IV terminates the MIPA without cause, including termination due to failure to obtain regulatory clearance. This reverse termination fee provides important context for the commercial calculus of pursuing remedies versus abandoning the transaction. If the cost and uncertainty associated with a remedy negotiation — including the risk that the FTC will ultimately reject a behavioral remedy and require a structural divestiture — exceeds the benefit of completing the transaction, the Harrowgate Investment Committee may elect to terminate the MIPA and pay the reverse termination fee. This commercial reality should inform our negotiating posture but should not be disclosed to FTC staff.
VIII. Meeting Logistics
A. Date, Time, and Location
The meeting is scheduled as follows:
•  Date: Monday, July 22, 2024
•  Time: 10:00 AM Eastern Time (to be confirmed with the FTC staff assistant; Elliot Nguyen to contact the Bureau of Competition, Mergers IV Division point of contact no later than close of business on Friday, July 19, 2024 to confirm the exact time and obtain a room assignment)
•  Location: Federal Trade Commission, 600 Pennsylvania Avenue NW, Washington, D.C. 20580 (the specific conference room and building entrance/security procedures should be confirmed with the Mergers IV Division administrative contact; attendees should plan to arrive at least 30 minutes early to allow time for security screening and visitor badge issuance)
Attendees traveling from New York should plan to depart on Sunday evening, July 21, 2024, or early Monday morning. Hotel reservations at the Willard InterContinental (1401 Pennsylvania Avenue NW, Washington, D.C.) have been confirmed for Howard Bellamy and Elliot Nguyen for the night of July 21. Diane Ochoa will arrange her own travel from Harrowgate's offices in New York.
B. Pre-Meeting Preparation
Aaron Liu will prepare a meeting binder for each attendee (four copies total — one for each of Howard Bellamy, Elliot Nguyen, Diane Ochoa, and Rajesh Subramaniam). Each binder will contain the following tabbed sections:
Tab 1: This memorandum (marked PRIVILEGED & CONFIDENTIAL — not to be shared with or left with FTC staff).
Tab 2: Copies of the HSR notification forms as filed on June 18, 2024, for both the Acquiring Person and the Acquired Person, redacted to remove commercially sensitive financial projections.
Tab 3: The Second Request specifications issued July 16, 2024, with annotations identifying each specification's scope and our proposed limitations.
Tab 4: The supplemental Item 4(c)/4(d) production log, documenting the twenty-three (23) documents produced on July 10, 2024, in response to the FTC's voluntary access letter of July 8, 2024.
Tab 5: Competitive landscape overview, including market share analyses under the narrow, intermediate, and broad market definitions described in Section V of this memorandum, supported by data from Tidewater Health IT, Bramwell Health IT, Adriatic Software, and Tidewater Enterprises surveys.
Tab 6: Entity organizational charts for (i) Harrowgate Capital Management LLC and HPE Fund IV, L.P. (showing the relationship between the Ultimate Parent Entity, the Fund, and portfolio companies including Dunmore); (ii) Dunmore Asset Management LLC (showing management structure and investment team); and (iii) Ridgemark Capital Advisors, LLC (showing management structure, investment team, and the relationship with selling sponsor Thornfield Growth Partners, LLC).
Tab 7: Key financial metrics summary, including:
•  Ridgemark Capital Advisors: Total AUM $4.7 billion; Alternative Credit SMA AUM $1.4 billion; Total Revenue $58.3 million TTM; Performance Fee Revenue $7.2 million TTM; EBITDA $16.8 million TTM.
•  Dunmore Asset Management: Total AUM $3.9 billion; Alternative Credit SMA AUM $2.1 billion.
•  Combined Alternative Credit SMA AUM: $3.5 billion.
Presentation Roles. The following roles have been assigned for the meeting:
•  Howard Bellamy will lead the presentation to FTC staff, opening with an overview of the transaction, presenting the substantive arguments regarding market definition and the distinct competitive characteristics of Dunmore and Ridgemark, and managing the overall flow of the discussion.
•  Elliot Nguyen will address technical and specification-related issues, including the proposed limitations on the scope of the Second Request (custodian list, date range, search terms, and data specifications).
•  Diane Ochoa will be available to address factual questions from FTC staff about Harrowgate's investment strategy, the commercial rationale for the Ridgemark acquisition, the operational relationship between HPE Fund IV and Dunmore, and the distinct client bases served by the two platforms. Ms. Ochoa should avoid volunteering information beyond what is directly responsive to staff questions, and Howard Bellamy will manage the flow of questions to Ms. Ochoa.
•  Rajesh Subramaniam will address Acquired Person-side issues, including Ridgemark's competitive positioning, client relationships, investment process, and the distinct characteristics of its alternative credit strategies. Mr. Subramaniam will also confirm Ridgemark's willingness to cooperate with reasonable Second Request scope limitations.
C. Coordination with Acquired Person's Counsel
Rajesh Subramaniam of Blackwell, Oakes & Hardin LLP is scheduled to be briefed via telephone conference call on Sunday, July 21, 2024, at 4:00 PM Eastern Time, regarding the unified presentation strategy for the meeting. Both sides should present a coordinated and consistent narrative on market definition, the distinct competitive roles of Dunmore and Ridgemark, and the proposed scope limitations for the Second Request. Any areas of disagreement between Acquiring Person's counsel and Acquired Person's counsel should be identified and resolved during this call; it is essential that we present a unified front to FTC staff.
Catherine Oakes of Blackwell, Oakes & Hardin LLP (lead M&A counsel for Ridgemark) and Thomas Pennington III of Lyle & Pennington LLP (counsel to selling sponsor Thornfield Growth Partners, LLC) have been notified of the meeting date, time, and general agenda. Neither will participate directly in the meeting or the July 21 preparation call. Mr. Pennington has confirmed that Thornfield Growth Partners defers to the parties' respective antitrust counsel on all matters relating to the HSR review.
IX. Post-Meeting Action Items and Next Steps
The following action items should be executed promptly following the July 22, 2024 meeting:
1.  Post-Meeting Debrief and Memorandum. Immediately following the meeting, all attendees should convene to debrief and discuss key takeaways, FTC staff positions and reactions, any commitments made or next steps agreed upon, and an assessment of the staff's overall posture toward the transaction. Aaron Liu will prepare a privileged post-meeting memorandum memorializing the substance of the meeting for the matter file, to be circulated to the Calderwood & Harkness team and Diane Ochoa within 48 hours of the meeting.
2.  Second Request Compliance Plan. Based on FTC staff feedback regarding our proposed scope limitations, Calderwood & Harkness will refine the Second Request compliance plan, including a revised custodian list, document collection protocols, search term methodology, and estimated timeline for substantial compliance certification.
3.  Scope Limitation Letter. If FTC staff is receptive to the proposed scope limitations discussed at the meeting, Elliot Nguyen will prepare a formal proposed scope limitation letter for FTC staff review and comment. This letter should be submitted to the FTC staff within one week of the meeting (i.e., by July 29, 2024) to maintain momentum and demonstrate the parties' good-faith commitment to efficient compliance.
4.  Escalation to Harrowgate Investment Committee. If FTC staff signals during the meeting that competitive concerns are serious and unlikely to be resolved through argument alone — for example, if the staff explicitly rejects our broader market definition or indicates that a remedy will be required — the matter should be escalated to the Harrowgate Investment Committee for discussion of commercial implications. The next scheduled meeting of the Investment Committee is August 5, 2024. The committee will need to consider the following issues:
(a) The potential cost of full Second Request compliance, estimated at $2.5–$3.8 million in outside counsel fees (Calderwood & Harkness and Blackwell, Oakes & Hardin) plus $800,000–$1.2 million in e-discovery vendor costs, for a total estimated cost of $3.3–$5.0 million.
(b) The estimated timeline for Second Request compliance and FTC review, which could extend the closing timeline by four to eight months beyond the current expected closing date.
(c) The potential scope and cost of any remedy (behavioral or structural) that the FTC may require as a condition of clearance.
(d) The strategic option of abandoning the transaction, including payment of the $7.4 million reverse termination fee under the MIPA, if the regulatory burden and uncertainty exceed the expected benefits of the acquisition.
(e) The impact of any delay on the competitive landscape, client retention at Ridgemark, and key employee retention risk during an extended regulatory review period.
5.  Ridgemark Q2 2024 Financial Performance. Monitor Ridgemark's Q2 2024 financial performance, which is expected to be reported in late July or early August 2024. Preliminary indications from Ridgemark management suggest declining performance fee revenue in Q2 2024 relative to prior quarters, potentially reflecting challenging conditions in the distressed credit market. If confirmed, this decline may affect the commercial calculus of the transaction and could be relevant to the antitrust analysis (to the extent it suggests that Ridgemark's market position is weakening, further undermining any argument that the transaction would eliminate a significant competitive constraint).
6.  Ongoing FTC Communications. Following the meeting, Howard Bellamy or Elliot Nguyen should maintain regular contact with the assigned FTC Mergers IV staff attorney to ensure that the review proceeds on a reasonable timeline and to address any additional requests or questions that arise during the investigation.
X. Privileged Communication Notice
This memorandum constitutes privileged and confidential attorney-client communication and attorney work product prepared in anticipation of litigation and regulatory proceedings. It reflects the legal analysis, mental impressions, and strategic assessments of counsel and is protected from disclosure under the attorney-client privilege, the work product doctrine, and all other applicable privileges and protections.
Distribution of this memorandum is strictly limited to the named recipients (Howard Bellamy, Elliot Nguyen, and Aaron Liu of Calderwood & Harkness LLP) and the attendees of the July 22, 2024 meeting (Diane Ochoa of Harrowgate Capital Management LLC and Rajesh Subramaniam of Blackwell, Oakes & Hardin LLP). This memorandum is not to be shared with, forwarded to, or made available to any third party without the prior written approval of Howard Bellamy, including but not limited to:
•  Financial advisors: Greycastle Partners LLC (buy-side advisor) and Cairnstone Advisory Group LLC (sell-side advisor)
•  Lender: Meridian National Bank, N.A.
•  Auditors: Pallister & Greaves Bramwell CPAs LLP and Ashfield, Stroval & Co. LLP
•  Other Harrowgate portfolio companies or their management (including Dunmore Asset Management LLC and Franklin Broussard)
•  Any other external parties, regulatory bodies, or governmental agencies
Inadvertent disclosure of this memorandum to any unauthorized recipient does not constitute a waiver of the attorney-client privilege or work product protection, and any such recipient is hereby directed to return or destroy all copies immediately and to notify Calderwood & Harkness LLP.
— END OF MEMORANDUM —
PRIVILEGED & CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT Calderwood & Harkness LLP | Matter No. 1003-00001 | FTC Transaction No. 2418-7603 Prepared by Aaron Liu, Working Associate, Antitrust & Competition July 19, 2024
Dimension | Dunmore Asset Management LLC | Ridgemark Capital Advisors, LLC
Investment Strategy | Broadly syndicated leveraged loans, CLO tranches — liquid, tradeable credit instruments | Direct lending, private origination, distressed/special situations — illiquid, proprietary credit
Sourcing Model | Secondary market purchases through dealer desks; primary market CLO new issuance | Proprietary origination; direct borrower relationships; distressed acquisition through negotiated transactions
Client Profile | Insurance company general accounts; smaller corporate pension plans | Large state pension funds; university endowments
Fee Structure | 40–55 bps management fee only | 75–100+ bps management fee plus performance/incentive fees
Liquidity Profile | Daily/weekly liquidity; mark-to-market pricing | Multi-year lock-ups (3–5 years); infrequent valuation
Portfolio Turnover | High (liquid markets) | Low (hold-to-maturity orientation)
Competitive Set | Large bank-affiliated loan managers; CLO managers (e.g., Ares, Northgate Capital Management CLO, Camberwell Asset Management) | Specialized private credit funds; BDCs; direct lending platforms
Revenue Model | Pure management fee | Management fee plus incentive/performance fee (carried interest model)
Market Definition | Estimated Market Size | Combined AUM ($3.5B) | Combined Share
Narrow (Alt Credit SMAs only) | $19B–$25B | $3.5B | 14%–18%
Intermediate (SMAs + Commingled Funds) | $50B–$70B | $3.5B | 5%–8%
Broad (All U.S. Institutional Alt Credit) | $350B–$500B+ | $3.5B | <1%