The number of merger and acquisition deals within the money management industry was flat in 2019 compared to the year before, but data show that the value of deals was only half of what it was in 2018.
The year featured few big deals, fewer deals involving alternative asset managers and fewer corporate divestitures from the year before.
Equity market increases, a scarcity of opportunity and high pricing expectations served as dampers on potential large-scale merger deals.
"The market still needs to consolidate, but people are cautious about how to go about doing that. Big deals are harder to do," said Aaron H. Dorr, a managing director at Piper Sandler Cos. and head of asset management investment banking.
Data from Piper Sandler Cos. show 263 merger and acquisition deals took place globally in 2019, compared with 262 in 2018. Meanwhile, deal value as of Dec. 31 reached $13.3 billion, compared with $27.2 billion the year before.
Acquired firms had to have at least $100 million in assets under management to be included in the firm's data. (Sandler O'Neill & Partners and Piper Jaffray Cos. merged to become Piper Sandler on Jan. 6.)
Apart from Brookfield Asset Management Inc. agreeing to acquire 62% of Oaktree Capital Group's business for $4.7 billion, which was the largest money management M&A deal of the year, 2019 didn't produce as many large deals like Invesco Ltd. buying OppenheimerFunds for $5.7 billion in 2018 or the merger between Standard Life Investments Ltd. and Aberdeen Asset Man- agement PLC in 2017.
Piper Sandler recorded two deals that had more than $100 billion in AUM in 2019, vs. eight in 2018.
"Most top-line integrations have taken place. The big deals have been completed," said Lee Beck, managing partner at Kudu Investment Management LLC, a New York-based a capital provider for asset and wealth management firms. "The question is, where do we look within the middle or smaller markets?"
Kudu made five investments in partner firms in the U.S. and Europe in 2019, including Versus Capital Advisors in March and EJF Capital in September, managing more than $50 billion in combined assets as of Dec. 31.