When Carlyle Group LP reached a deal last week to acquire L.A.’s TCW Group Inc. from a French bank, all sides got what they wanted.

The Washington, D.C., private-equity firm snagged one of the country’s largest asset managers, while seller Societe Generale SA unloaded a burdensome asset.

But the real winners might have been the leaders of a firm that doesn’t even exist anymore: Metropolitan West Asset Management, a small fixed-income shop.

The West L.A. firm was acquired after the contentious and high-profile firing of TCW star fund manager Jeffrey Gundlach in 2009. The dramatic episode damaged TCW’s reputation, and forced the firm into a hasty arrangement that put MetWest executives into powerful positions at TCW.

In fact, the strength of funds led by MetWest managers – such as MetWest co-founder Tad Rivelle – has masked a significant decline in the legacy business of TCW, which saw the loss of dozens of longtime employees and tens of billions of dollars in assets after Gundlach’s ouster.

“If we look at where the assets are, they’re mostly in the MetWest product areas,” said Geoff Bobroff, a mutual fund industry consultant and president of Bobroff Consulting Inc. in East Greenwich, R.I. “That’s where their growth has been.”

The structure of the Carlyle deal reflects MetWest’s oversized role. Several longtime TCW leaders, including Chief Executive Marc Stern and founder-Chairman Robert Day Jr., will relinquish titles, while former MetWest executives will expand their influence.

Former MetWest Chief Executive David Lippman last week assumed the same title at TCW, while MetWest co-founder Laird Landmann is expected to join the board. According to sources familiar with the situation, MetWest veterans will likely hold two of the three board positions not grabbed by Carlyle, which will take four of seven seats.

“MetWest holds all the keys,” said a former TCW officer who asked not to be named. “The original TCW is a shadow of itself. The MetWest guys are pretty much the show.”

Hidden issues

Lately, TCW has had respectable fund performance and its companywide assets are in excess of $131 billion, the highest level since before the financial crisis. Assets under management have been on the rise for nearly two years as the firm has launched mutual funds and expanded its focus on the European and Middle East markets.

But experts said many of the firm’s recent successes are attributable to its acquisition of MetWest, which has kept TCW afloat. MetWest’s heavy focus on fixed income has proved popular with investors. In fact, TCW’s flagship fund is called the MetWest Total Return Bond Fund.

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