Primecap Management Co., which runs two top-performing mutual funds for the Vanguard Group, hired an investment bank as executives consider selling the firm, people familiar with the decision said Tuesday.
Pasadena-based Primecap, which has about $14 billion of assets under management, is in the early stages of discussions with bankers at Merrill Lynch & Co., sources said. Potential buyers are just beginning to examine the firm's records.
Officials at Primecap didn't return calls for comment. A Merrill banker declined to comment.
Primecap is led by a team that includes co-founder Howard Schow, who is 71. By selling, Schow and other Primecap executives, including President Theo Kolokotrones, would be cashing their stakes for less than they could have garnered three months ago, when U.S. stocks were at record highs, analysts said.
Executives at Primecap join an increasing number of money managers who are considering selling their firms. About 70% of closely held asset-management firms expect ownership changes over the next five years, largely because the owners are getting older and need to plan for their succession, according to a survey by Boston-based Downer & Co.