There’s a lot of sound reasoning behind the idea that asset management mergers and acquisitions are likely to slow in 2017 after several very busy years, including $17.1 billion in transactions last year alone. Global equity market and political uncertainties abound — and as more investors flock to passive investments, there will be continued pressure on managers to lower fees and yet find ways to increase operational efficiencies to maintain profitability. Meanwhile, small, regional and mid-sized managers are beset by giant players on one side and boutiques on the other.
All of this means asset management M&A will have bright spots, even if the overall dollar volume of deals falls in 2017. Private wealth management “aggregator” firms will continue rolling up smaller and regional practices. Hedge fund and private equity managers will continue to sell minority, passive stakes as a path to liquidity for their owners, and increased use of technology and machine learning should continue as forces disrupting traditional investment advice delivery methods for retail and retirement plan investors.
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