After a busy year for mergers and acquisitions in the industry, investment consultants still see a potential for new deals moving forward.
Stephen Cummings, CEO of Aon Hewitt Investment Consulting Inc. and global investment officer, head of North America investments at Aon PLC, Chicago, expects that the recent pace of consolidation in the investment consultant industry "will likely continue."
On its part, Aon is "always keeping (its) eyes open for things that may be interesting for our clients," Mr. Cummings said of potential acquisitions — though its sights aren't set on acquiring any particular set of capabilities.
"As the second-largest (investment consulting) firm out there, we have a lot of capabilities, but we're certainly always aware of what's going on," he said.
Aon's most recent deal closed in January 2018, when it completed its acquisition of real estate investment management and consulting firm the Townsend Group for $475 million. The deal to acquire Townsend, which was majority owned by Colony NorthStar Inc., helped Aon significantly expand its investment capabilities, such as outsourced CIO and advisory services for large and midsize global organizations, Aon said in an announcement at the time.
Townsend advised on $175.7 billion in global assets and managed $14.5 billion in assets when the deal was announced in September 2017.
More recently, Aon considered combining its business with Willis Towers Watson but quickly announced in March that it was no longer pursuing the deal, which could have been the industry's largest merger.
As for the other big tie-ups, another large investment consultant, Meketa Investment Group Inc., Westwood, Mass., inked a deal this spring to acquire Pension Consulting Alliance LLC, Portland, Ore., which boosted the firm's collective client AUA to approximately $1.8 trillion, up from up around $1.1 trillion prior to the combination.
As of June 30, Meketa was ranked No. 8 by worldwide institutional AUA with $1.98 trillion, up 76.6% from the previous year, Pensions & Investments' survey showed.
Meanwhile, Callan LLC, San Francisco, has separately said it is open to considering the acquisition of smaller players in the consulting space, said Gregory Allen, CEO and chief research officer.
While Callan has the scale where it wouldn't need to merge with a larger firm, "there are smaller firms where it might make sense to merge (with) us, so we are looking at that," he said.
"We are always open. People do approach us, and we do entertain those conversations. But (as far as) us being absorbed into a larger organization, I don't think the economics would make much sense for them or us," he added.
While Mr. Allen said the firm does not have a strategic initiative in place now to search for particular capabilities, Callan is "going to be opportunistic when an opportunity comes along."