Manager M&A down but certainly not out
Deal numbers decline, but assets involved are up; big players tease more in 2021
Jeffrey B. Stakel sees revenue pressure and slower growth as big factors for continued consolidation.
Money management merger and acquisition activity slowed a bit in 2020 compared with 2019, even as some of the industry s largest players, including State Street and Vanguard, were said to be eyeing asset management deals and opportunities.
While there were fewer deals last year, deals appeared to be larger overall, representing more transacted assets. There were 214 global asset management transactions during the year ended Nov. 30, down from 247 transactions from January through November in 2019, data from Piper Sandler Cos. shows. During the 11-month period last year, $2.59 trillion in assets under management were transacted, up from $1.18 trillion in AUM transacted from January through November in 2019, Piper Sandler found.
Traditional asset managers that are publicly traded have long offered investors the option of owning a piece of a steady read boring business. But Casey Quirk, the asset management strategy consultant owned by Deloitte, is forecasting that the much sexier business of managing private market assets will soon dominate, coming to represent about one-third of the industry’s revenue by 2024.
Recent tie-ups between managers, including Macquarie’s planned purchase of Waddell & Reed Financial, is speeding up the ascendance of private equity and other alternatives firms and transforming exchange-listed asset managers into a much hotter sector.
“I don’t think this is a cyclical trend. It’s secular,” said Benjamin Phillips, principal and chief strategist at Casey Quirk. “Why? Alternatives firms are valued at nearly twice the multiple of that of traditional managers. That reflects organic growth that is expected in the future and fees. Fee pressure hasn’t manifested in al
Managers focus on employee health, preserving culture
Firms nurture a network of support for workers forced to work from home
Photo: Callie Lipkin
Jeffrey T. Diehl of Adams Street believes more frequent meetings will become a permanent thing after the pandemic eases.
Money managers are as razor-focused on the preservation of their corporate cultures and the well-being of their employees as they are on their investment strategies and clients with the COVID-19 pandemic continuing to wreak havoc worldwide.
Employees of firms as large as PGIM Inc., with 2,637 U.S. employees, as well as a small firms like Aetos Alternatives Management LP, with 33 U.S. staffers, described collaborative, supportive company cultures that helped them to work remotely during the coronavirus pandemic.
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NEW YORK and STAMFORD, Conn., Dec. 15, 2020 /PRNewswire/ Seeking broader and deeper ties to clients, asset managers worldwide expect to increase annual spending on data and technology to $84 billion by 2023 from $50 billion in 2019. Investing the money wisely not merely boosting budgets will separate the leaders from the laggards, according to the latest research from asset management strategy consultant Casey Quirk, a Deloitte business.
Data and technology are becoming core to the asset management business and critical resources required for firms to operate effectively, particularly in the post-pandemic world, according to the Casey Quirk white paper, Technology for the C-Suite: Driving Competitive Advantage in Investment Management.