No One Saw It Coming: Castle Harlan President Resigns

Today’s top private equity story is also its oddest: Justin Wender’s decision to resign as president of Castle Harlan.

For the uninitiated, Wender was named president of Castle Harlan back in 2006, as firm co-founders Len Harlan and John Castle continued to transition into more patriarchal positions (both remain fulltime). He had been with the firm since 1993, and Castle Harlan referred to the move as a “widely anticipated promotion.” In other words, an orderly succession plan.

Castle Harlan was investing out of a $1.16 billion fund at the time, and in late 2007 went out to raise Fund V with a $1.5 billion target. The process dragged on until this past March, with a final close on just $800 million (the “just” is relative to the target – any $800m fund close in early 2010 should be commended).

Wender was fully on board throughout the fundraise, and apparently didn’t inform Castle Harlan of his decision until just the past week or so. The firm reached out to limited partners yesterday morning – trying to reach them before the news leaked – and then issued a press release about how senior managing directors Howard Morgan and Bill Pruellag were promoted to co-presidents.

What wasn’t in the release, however, was why Wedner left. I spoke with John Castle earlier this morning, who seemed to be at a genuine loss. “I’ve heard some talk that there were policy issues, but I think I’ve been totally flexible on those,” he said. “All I know is that he’s heading to Africa at the end of next week to climb Mount Kilimanjaro. After that, I’m not sure what his plans are.”

I’ve also spoken to a few Castle Harlan LPs, who were equally blindsided. One of them said: “Justin was anointed prophet but, for some reason, doesn’t want it anymore. But John and Len have put together a strong team, so I’m not worried about the fund.”

Wender’s departure does not require any fund term changes, and his one board seat was effectively being phased out anyway (Ames True Temper, which has agreed to be acquired).

Look, people leave jobs all the time for a million different reasons. But, in private equity, it’s unusual for a firm’s leader to depart just after a new fund is closed. I’m not suggesting anything nefarious, but something just seems odd here.

Hoping to chat with Wender later today, who might be able to shed additional light…