A battle over the late San Diego Padres owner's private equity firm

The big picture: Seidler Equity Partners was founded in 1992 by Peter and his brother Bob, with third partner Eric Kutsenda joining several years later.

• It mostly focuses on midmarket deals and is investing out of a $1.25 billion fund raised in 2023. Its assets under management top $5 billion.
• Bob and Eric now run the firm, but the largest economic stake in its management company (SKMC) is held by a trust of which Peter's widow, Sheel Seidler, is the sole beneficiary during her lifetime. She is not, however, the trustee. That role is held by Peter's oldest brother, John.
• The trust's position in SKMC is passive, and somewhere between 25% and 50%.

Zoom in: Sheel Seidler would like the trust to sell its position in SKMC, according to a source familiar with the situation. It's unclear if her primary motivation is financial, cleaving her relationship with her brothers-in-law, or both.

• There almost certainly would be a market, at least at the right price, given the recent boom in GP stakes funds.
• The other Seidlers and Kutsenda, however, are said to have no interest in permitting such a deal. And they appear to have the final say, since managing members must approve ownership stake transfers (per industry standard, not specific to this situation).

The intrigue: Sources close to the brothers argue that Peter would never have wanted a stake sale to outsiders, to the point that he created a preventative mechanism that effectively acts like a put option.

• In short, the surviving members of SKMC are obligated to purchase the position of a deceased member at a pre-negotiated rate.
• This "redemption agreement" actually was implemented by the trust and brothers, according to a lawsuit that Sheel Seidler filed earlier this year in Texas probate court.

• But she claims that it was at a below-market rate that created a loss for her and a long-term gain for the brothers. In short, alleged self-dealing. The redemption was later rescinded, thus putting the SKMC stake back in the trust (albeit with some purported changes).
• The brothers and Kutsenda, meanwhile, argue in court filings that the redemption was done at a "premium value," and that all of this should be hashed out in arbitration rather than in probate court.

The bottom line: This is all quite ugly, as family financial disputes tend to be.

• Sheel ultimately may succeed in getting a new, non-Seidler trustee who then could bring the SKMC stake to market. Or some other outcome to her benefit. But she'd still run into the transfer restrictions, which could kill an auction in its crib.
• Her best chance might be to wait for a change of heart, or to find a GP stakes bid so lucrative that it changes hearts on its own.