Ferrer Freeman Loses CFO as Firm Appears Close to Winding Down

Ferrer Freeman & Co. has lost its CFO and the private equity firm is apparently winding down, multiple sources confirm.

Tom Flynn, Ferrer Freeman’s CFO and an investment partner, joined SV Life Sciences as of Jan. 1, a spokeswoman for the VC firm confirmed Tuesday. Flynn is a venture partner at SV Life Sciences. He began working informally for the SV Life Sciences in late fourth quarter, the spokeswoman says.

A person at Ferrer Freeman confirmed that Flynn left the buyout shop. His departure follows Tricia Summers, who left Ferrer Freeman in 2010. Summers was CFO at the time, sources say.

Calls to Ferrer Freeman were not returned.

Greenwich, Conn.-based Ferrer Freeman, a healthcare PE firm, manages over $900 million. The buyout shop was founded in 1995 by Carlos Ferrer, a former Credit Suisse healthcare banker, and David Freeman, an ex-J.P. Morgan healthcare banker.

Rumors of Ferrer Freeman’s problems have circulated for some time. Over the summer, sources told me that Ferrer Freeman had indefinitely postponed efforts to raise its fourth fund, after more than a year of trying, and could wind down if it failed to raise money. I’m hearing that any fundraising plans are off, and the PE firm is “winding down” and selling off its portfolio, four sources say.

“It takes a long time to kill a PE firm,” one buyout exec says. “They had return issues for a long time.”

“It’s over,” a banker says.

Ferrer has raised three funds. Fund I raised $200 million in 1997, while its second pool, FFC Partners II LP, totaled $291 million in 1999. Ferrer Freeman’s third fund came in at $400 million in 2004. The first two funds are invested and Ferrer was investing from its third fund.

Ferrer’s second fund has a net IRR of 7.6% as of March 31, 2010, according to CalPERS. CalPERS was also an LP in Ferrer’s third vehicle but appears to have since sold the position (the last data we have is a -4.6% IRR at year-end 2007).  I have no investment data for the first fund.

However, Ferrer has scored some exits recently. Last week, Irving Place Capital inked a deal to buy National Surgical, which owns and operates a network of 14 surgical hospitals, from Ferrer Freeman, Charlesbank Capital Partners and JP Morgan Asset Management. Financial terms were not announced. Ferrer Freeman was also an investor in Concentra, a portfolio company of Welsh Caron, which was sold to Humana in December.