M&A activity among wealth management firms accounted for 48% of transactions in the asset management industry last year, according to Berkshire Capital Securities' 2005 Investment Management Industry Review. "There are a lot of buyers out there and now we are seeing an influx of sellers," Berkshire Managing Director Elizabeth Nesvold said in an interview.
The number of deals in wealth management was up 25% to 64, but deal values were down to $2.1 billion in 2004 from $6.3 billion in 2003 because the sector "lacked a blockbuster deal" and buyers emphasized smaller, strategic transactions, the report found. UBS' $302 million purchase of U.K. firm Laing & Cruickshank Investment Management was the year's largest transaction.
Overall, the number of mergers and acquisitions globally in the asset management industry changed little in 2004, with 133 deals worth $10.7 billion, compared with 135 deals valued at $9.3 billion in 2003. J.P. Morgan's $1.3 billion acquisition of hedge fund firm Highbridge Capital Management led the industry, the report found. Mutual funds were the quietest sector, with 15 transactions - their lowest level since 1998 - as the market-timing scandals and subsequent fines hurt the industry. Mutual fund deal value rose to $2.2 billion in 2004 from $700 million in 2003, mainly due to Wells Fargo's purchase of Strong Capital's $29 billion in assets under management.
In the institutional sector, there were 36 transactions worth $4.9 billion in 2004, up from 27 deals valued at $1.4 billion in 2003. The largest institutional deal involved Friends Provident Group's $700 million acquisition of F&C Asset Management.
