Global merger and acquisition transaction volume among money managers in the first half of 2017 was the busiest first half of the year since 2008, said a new report released by Sandler O'Neill + Partners.
Sandler O'Neill's review reported 98 transactions announced globally in the first six months, up 27% from the first half of 2016.
The total disclosed deal value in the first half totaled $11.3 billion, compared to $6.9 billion in the first half of 2016.
Smaller manager sales drove increased transaction activity, with 62% of deals involved sellers with AUM of less than $3 billion and 42% were less than $1 billion. Meanwhile, deals with managers of $3 billion to $10 billion in AUM were consistent with the same period a year ago, as acquiring firms continue to be selective and focused in their deal-making activities, according to the report.
"Buyers today are only interested in businesses that either have strong organic growth characteristics or provide some level of cost synergy and scale," said Aaron H. Dorr, a principal at Sandler O'Neill and head of asset management, in a phone interview.
Given that all traditional institutional firms are facing the same pressures, such as the shift to passive, fee pressure and the increasing costs of doing business, Mr. Dorr added that "sellers are looking for partners who can help them grow and diversify."
The report also revealed that alternative asset manager deals rose to 37% of deal volume. This was driven by a jump in sales of stakes in private equity managers, which represented 53% of alternative deals vs. 29% in 2016.
The largest global money management transactions in the first half of 2017 were the merger between Aberdeen Asset Management (with $372 billion assets under management) and Standard Life ($342 billion AUM); Old Mutual PLC's sale of a nearly 25% stake in OM Asset Management to HNA Capital U.S. ($240 billion AUM); Focus Financial Partners' majority stake sale to an investor group led by Stone Point Capital and KKR & Co. (estimated at $100 billion AUM); Fortress Investment Group's sale to SoftBank Group ($70 billion AUM); and Hamilton Lane's initial public offering ($40 billion AUM).