Global asset management merger-and-acquisition activity this year could rival the record pace set in 2000, according to a report from Putnam Lovell NBF Securities. The Legg Mason-Citigroup and BlackRock-Merrill Lynch deals have turned a "lazy drift" toward core competencies in either manufacturing or distribution into a "sprint," said Putnam Lovell's report, "Shake, Rattle and Roll: Tectonic Realignment."
The increasingly complex advice needs of both retail and institutional clients are one factor behind the move toward core competencies, Benjamin F. Phillips, a Putnam Lovell managing director and principal author of the report, said in an interview. The trend is only "at the beginning of the middle" in the U.S. and is set to pick up dramatically in Europe as well, he said.
Even firms that maintain both manufacturing and distribution capabilities are realizing "they must differently position, and separately manage, their various competencies," the report said.
The number of deals, as well as average deal size, should continue to rise, according to the report. There could also be more "reverse mergers," with financial services companies trading their fund manager groups to independent asset managers in return for a minority stake in that asset manager's operations, helped by the lofty market prices that listed asset managers should continue to enjoy.