Money management executives have been aggressively moving to take their firms' financial fates into their own hands, making management-led buyouts a major trend during the past five years.
Since 2001, there have been 69 management buyouts, compared with 12 from 1996 to 2000, according to investment banking firm Berkshire Capital Securities LLC, New York
In the past 30 months, the trend accelerated significantly, outpacing nearly all of the buyout activity in the combined nine years prior. Some 44 management buyouts were completed since the beginning of 2003 — the same number completed during the nine-year period ended Dec. 31, 2002.
The boost in activity has been buoyed primarily by the slew of large mergers and acquisitions that took place in the asset management industry in the late 1990s and the increased presence of private equity firms offering capital to support management buyout ventures.
With roughly three years of difficult market conditions following several years of robust M&A activity, acquirers have been forced to take a hard look at their overall lines of business. "Tough times prompt people to reflect on the model," said Elizabeth Nesvold, managing director at Berkshire Capital.