Wall Street's M&A business for asset management companies will be fueled by strategic expansion purchases and corporate divestitures over the coming year, according to a new survey by Jefferies Putnam Lovell.
In the deals involving financial institutions, corporate sellers will aim to maintain minority stakes in the business units they sell. By contrast, financial technology companies will seek to build scale through acquisitions, particularly in the administration and financial processing area.
The Winds of Change: First-Half 2009 M&A Activity in the Global Asset Management, Broker/Dealer, and Financial Technology Industries report by New York's Jefferies Putnam noted that company sellers' motivations will be driven by more than just a need to raise capital. A range of factors, including product diversification and retiring owners seeking liquidity, will spur more deal activity.
The report also addressed the canyon between M&A buyer and seller expectations, which is expected to fuel public securities transactions, such as IPOs, as means for exiting investments.
Indeed. A number of private equity portfolio companies have filed registration statements to hold IPOs and secondary market sales. Dollar General Corp., a retail holding of New York buyout firm Kohlberg Kravis Roberts, recently filed to raise $750 million.
As it concerns industry sectors, Jefferies Putnam expects that deals involving clearing houses and electronic trading platforms are likely to dominate the acquisition business as banks and brokerages seek to counter "pricing compression" as a result of structural reforms.
Private equity buyers, too, will return to the business of acquiring companies even in industries that have taken a beating from the recession.
For example, Boston private equity firm Advent International agreed to acquire San Diego women's apparel company Charlotte Russe Holding for roughly $380 million, or $17.50 a share, in a deal announced Monday.
