Money management mergers and acquisitions announced in 2012 totaled 72, a 27% decline from the year before, according to a report Thursday by PricewaterhouseCoopers.
While the number of deals declined in 2012, total deal volume increased 161% to $8.6 billion, largely driven by Morgan Stanley (MS)'s acquisition of the remaining interest in Smith Barney for $4.7 billion, the report said.
Excluding that megadeal, as well as the $1.5 billion sale of Neuberger Berman by Lehman Brothers Holdings in 2011, deal volume still more than doubled in 2012 to $3.9 billion in 2012, from $1.8 billion in 2011, said Samiye Yildirim, PwC's U.S. asset management M&A leader, in an interview.
Ms. Yildirim said historically money management deals have been driven by deal activity involving the sale or merger of small- to medium-sized money management firms, between $5 billion and $10 billion — firms that haven't been involved in many M&A deals since the financial crisis.
“There are a lot of small firms waiting on the sidelines for the market to improve,” Ms. Yildirim said.
Ms. Yildirim said that while she doesn't expect these independent managers to flood back into the market in 2013 in large numbers, her firm does anticipate some improvements in the number of deals involving such independent managers with expected improvements in valuations.