Diving Deeper into M&A Strategy for Financial Growth
Investment professionals are emphasizing the importance of thoughtful consideration before diving into a deal, especially in the asset management sector. When it comes to mergers and acquisitions (M&A), the focus should ideally be on creating long-term value rather than simply filling product gaps.
The asset management industry is experiencing a rise in M&A activity in 2024, with big players like Magellan, Regal Partners, and Pinnacle all making moves in this space. Offshore, over 80 transactions have been completed this year, with more than half involving alternative investment managers, according to a report by Piper Sandler in September.
Looking at local transactions, around 25 deals have taken place so far, with multi-affiliate acquirers, private equity firms, and asset managers making up the bulk of these transactions.
During a recent webinar, Scarcity Partners’ managing partner, Adrian Whittingham, indicated that the actual volume of transactions could be even higher than reported, showing a clear interest and demand in this sector. However, Whittingham advised against rushing into deals, emphasizing the importance of aligning strategic, cultural, and long-term growth goals to ensure sustainable value for investors and shareholders.
He pointed out that listed companies may seem appealing due to the readily available information, but completing a transaction doesn’t guarantee immediate growth. It’s crucial to consider the long-term implications of any deal to ensure it benefits all stakeholders involved.
Earlier this year, Morningstar highlighted how active asset managers are exploring niche asset classes to diversify their product offerings. Their Q3 industry pulse report for fund management noted that recent business successes were mainly driven by interest in non-traditional asset classes like private debt, private equity, and specialized fixed-income strategies, compared to weak interest in equities managed by traditional methods.
