Money manager mergers and acquisitions totaled 66 in the first six months of 2014, down 12% from the first half of 2013, said a quarterly Sandler O'Neill + Partners report issued Tuesday.
Despite the decline in transaction volume, the disclosed deal value for M&A transactions in the first half of 2014 reached $12.9 billion, 68% more than the $7.7 billion disclosed deal value during the same period of 2013. And although transaction activity was down from the year-earlier period, 37 of the 66 deals were announced in the second quarter, which could indicate a pickup in the second half of the year.
During the second half of 2013, Sandler O’Neill tracked 71 transactions and $4 billion in disclosed deal value.
There has been a decline so far in 2014 in tactical deals involving midsize asset managers. There were 24 deals involving asset managers with $1 billion to $10 billion in assets, down from 37 deals in the same period a year earlier and 29 in the second half of 2013.
In addition, banks slowed their rate of money manager divestitures, with only six sales in the first six months of 2014, compared with 16 in the same period a year earlier and 13 in the second half of 2013.
“With positive organic industry growth trends coupled with low financing costs and strong trading multiples across the buyer community, we expect steady deal flow for the remainder of the year,” the report said. “While buyers continue to be more aggressive, they also remain selective thus we do not expect a frothy M&A market.”
The trend of increased total disclosed deal value for both M&A and public equity capital markets transactions was marked by three large deals, each at more than $1 billion: TIAA-CREF aNuveenng Nuveen Investments for $6.25 billion; Northwestern Mutual selling Frank Russell Co. to London Stock Exchange Group for $2.7 billion; and Bank of Montreal purchasing F&C Investment Management PLC for $1.2 billion.
Global strategies, liquid alternatives and differentiated traditional investment strategies remain the favored areas for acquisition among buyers, the report said.