In an unusual move, a Roman Catholic university has partnered with and could buy a for-profit financial firm with the aim of helping its professors do more outside consulting. And the university is hiring the founder of the firm for a key financial position.
The University of Mary, a 3,000-student institution in Bismarck, North Dakota, is hoping to take advantage of an oil boom in the state. To do so, it’s hired the head of a financial advisory firm as its chief investment officer and now has the option to buy his company in three years.
The official, Patrick O’Meara, is the founder of O’Meara, Ferguson, Whelan and Conway, which consults for Roman Catholic nonprofits to do fund-raising and get them access to financing.
O’Meara has given up his job with the company – but not his shares, which the university could eventually buy from him – to become Mary’s chief investment officer and vice president for mission advancement. (He remains on the firm's board.)
In a telephone interview Friday, O’Meara said the goal of the arrangement is to jump-start the university’s consulting operations, which are in demand from local businesses as they try to take advantage of the booming economy and population.
The university’s deal with O’Meara Ferguson has several parts. First, the university is paying the firm for ongoing consulting services, including help with its strategic plan, a capital campaign and capital financing deals.
Second, the university is partnering with the company to create a for-profit consulting arm. If the deal goes well, after three years the university could buy the firm. In that case, it would be buying out the shareholders, including O’Meara, who is now the university’s top investment official.
O’Meara, who just moved to North Dakota from Michigan, said not much money would be involved in any deal.
“We’re talking about building the kingdom of God, serving the mission, and making a reasonable living,” O’Meara said.
He said the firm, which was founded in 2000 and lists 25 other employees on its website, had previously lacked an exit strategy for its shareholders because of its focus on Roman Catholic nonprofits.
Other potential buyers “would take us and want to turn us into something different,” O’Meara said. Not so with a Roman Catholic institution like University of Mary.
There’s a chance the firm’s close ties with University of Mary will cause some of its other existing clients to walk away – perhaps a half-dozen, O’Meara said.
Mary is right amid a boom time in North Dakota. The state’s population has grown 12 percent in the past five years and the unemployment rate is the lowest in the nation.
So, as local businesses wonder how to capitalize, local business professors from Mary’s have been moonlighting as consultants. So far, they’ve been keeping 100 percent of their consulting revenue. Under the new deal, some will have to give up a percentage of that if they choose to consult through the new consulting arm. The university and O’Meara Ferguson will share some of that revenue. O’Meara said professors don’t have to work through the firm if they don’t want to.
One goal of the deal, O’Meara said, is to make sure the quality of the professors’ consulting services are consistent, though he and a university spokesman both said there had never been any complaints.
Another goal was to be able to take on larger consulting projects that involve teams of professors.
“The university needed a better mechanism to interface with this growing business community,” O’Meara said.
Asked if there were provisions to deal with a conflict of interest – because he would still own stake in the company – he said the University of Mary’s chief operating officer would approve all the consulting deals that involved revenue-sharing between the firm and the university.
He also said he was “immunized from the performance of this arrangement” while he was with the university, although he would receive benefits if the university chose to buy his firm.
O’Meara Ferguson has run into legal trouble with at least one of its clients recently. The Diocese of Austin sued O’Meara Ferguson in January 2013 and claimed the firm had defaulted on loans the diocese had made to it several years earlier. It is unclear from the court record why a nonprofit church organization was lending a for-profit company money, but the diocese alleged it was owed more than $1.8 million. O’Meara Ferguson settled out of court for an undisclosed cash sum.
A spokesman for the University of Mary who arranged the Friday interview with O’Meara did not return an email over the weekend seeking comment on that situation.
On Monday morning, O’Meara said in a telephone interview that the lawsuit came after the diocese and his firm made a joint investment in a fundraising firm. When the diocese’s leadership changed, the new bishop of Austin no longer wanted to remain an investor and wanted to be bought out immediately, O'Meara said.
"[O'Meara Ferguson] eventually did buy them out, but not soon enough for the Diocese of Austin,” O’Meara said, and the difference in timing resulted in the lawsuit.
He provided a letter written last August by the chief financial officer of the Diocese of Austin that said the dispute and litigation were unrelated to the firm’s client services.