Updated with correction
The blockbuster divestitures that dominated money manager merger-and-acquisition activity in 2009 gave way to a raft of smaller deals in 2010, driven by globalization and the continued blurring of lines between traditional and alternative investments.
The year saw a pickup in the number of deals, while both deal value and assets under management changing hands dropped dramatically as sales by financial conglomerates looking to shore up their balance sheets in the wake of the 2008 market crisis subsided.
Freeman & Co. LLC reported 227 money management-related M&A deals for the latest year, up 27% from 2009. But combined assets under management in those deals came to $711 billion, down from $4.7 trillion in 2009 and less than half of last year's biggest deal: BlackRock Inc.'s purchase of Barclays Global Investors, and its $1.5 trillion in AUM.
Cambridge International Partners, which only tallies deals where money management operations account for more than 50% of an acquired firm's revenue, reported 177 deals for the latest year, up slightly from 174 deals in 2009. Combined deal value, meanwhile, tumbled to $18.1 billion, from $35.2 billion the year before.
Despite the mixed results, investment bankers insist the latest vital signs for M&A activity point to improved health for the industry. Forced divestitures accounted for six of the 10 biggest deals in 2009 but only two of last year's crop — Brussels-based KBC Bank's sale of its European private banking arm to Mumbai-based Hinduja Group and Paris-based BNP Paribas Group unit Fortis Bank's sale of Artemis Investment Management to Beverly, Mass.-based Affiliated Managers Group, said John Temple, a managing director with New York-based investment bank Cambridge.
And with the move offstage by distressed sellers came “the return of the strategic buyer” to the market in 2010, Mr. Temple argued.
That buyer, apparently, was increasingly looking overseas and eager to offer both traditional and alternative investment capabilities.
The transactions of the past year reflect “fundamental changes in the way investors are demanding their money be managed,” noted David Heaton, a managing director with Morgan Stanley & Co.'s investment banking division in New York.