M&A deal flow for money managers picked up in the first half of 2013 compared with the same period last year, with 10% more transactions and a whopping 114% more assets — some of which, but not all, is due to market increases. Deals were relatively small, with the average under $10 billion — experts point to a back-up of deals at the end of 2012. With $1.31 trillion sold at a value of $8.4 billion, the ratio of price to assets is striking — less than 1%. Compare this to prices over 3% in M&A’s heyday.
While profit margins for money managers (especially in the U.S.) were up in 2012, domestic equities (particularly large cap) and fixed income saw significant net outflows, which would cause companies to look for cost savings and perhaps mergers.
What does it mean for plan advisors? Not much, unless the fund manager moves as a result of the transaction — but that can happen even without a sale.
