Until Citi-Legg, the M&A pace in the asset management industry was relatively sluggish. But in the five days following the Citi-Legg news, six new money management acquisitions were executed, according to data from Boston-based investment banking firm Putnam Lovell NBF.
Prior to the Citi-Legg deal, there were 59 manager mergers or acquisitions announced; now, the total is 65 for the full first half of 2005. That compares to 66 for the first half of 2004, but 153 for the entire year.
The total value of the deals so far in 2005 is greater than in all of 2004, even if the Citi-Legg deal is excluded.
According to Putnam Lovell, money management deals were valued at $7 billion for the first half of this year, and $3.3 billion without Citi-Legg. That compares to roughly $2.2 billion in the first half of last year, and $10.9 billion for the full year.
Following the announcement that Citigroup would swap its $437 billion asset management business for Legg Mason's brokerage operations, several similar deals were soon announced.
"There's a lesson to be learned from the Citi and Legg Mason deal, and it's that firms are finding it increasingly difficult to have their brokers selling proprietary, in-house funds," said Paul Holt, president of Cambridge International Partners, a New York-based investment management M&A advisory firm. "It's a new regulatory environment, and it's a reality that a number of firms now have to deal with."