After several years of intermittent deal flow in wealth management, is it now the time to bring private client businesses to the market? So ...

After several years of intermittent deal flow in wealth management, is it now the time to bring private client businesses to the market? So far in 2005, it looks as though rumours of the accelerated potential for M&A activity in the wealth and asset management sector have not been exaggerated. The activity in the UK is a microcosm of the transactions now occurring in Spain, Germany, France, Belgium, Italy, Austria, Norway, the Netherlands and even Switzerland, according to our deal tracking process at Scorpio Partnership. The cheque book is out, the quills have been dipped in ink and the senior management appear ready to sign.

Intriguingly, the deal opportunities are now clearly zoning on firms with £5-15 billion under management. The business models of these firms are too small to be big and too big to be small. One recent example in the UK has been the GBP188 million offer by Carr Sheppards Crossthwaite (CSC) for private client investment manager, Rensburg. CSC has £10.3 billion under management. Another has been the recent MBO of Tilney Investment Management which has GBP5 billion under management. Meanwhile, there is the rumoured auction for the UK-based asset management business of Deutsche Bank. An undeclared slug of this business is private client funds.

A direct beneficiary of this activity is the, currently, limited number boutique corporate finance advisors working on the deals. One of the most ubiquitous so far this year has been independent corporate finance adviser Hawkpoint, which has had an, unsuccessful, involvement in the CSC deal while acting for Rathbone Brothers, and is currently rumoured to acting for Deutsche Bank. This latter deal is expected to be worth some £400 million to £800 million. Another active advisor is Livingstone Guarantee, which acted for Refco in the MBO of Tilney Investment Management. A third is Ray Soudah’s Swiss-based Millenium Associates which has now acted for Barclays Bank in the French acquisition of the wealth management business of ING Securities Bank in France.

There is little doubt that M&A advisors, both boutiques and majors, will steadily turn their attention to the busy wealth management sector. These deal hunting firms are sensing that the choppy nature of the market is now throwing up more opportunities than ever and a rebalancing of the global wealth management landscape is underway. Furthermore, the fragmented nature of the wealth management market provides ample opportunities for existing players to grow and for private equity houses to execute ‘buy and build’ strategies. In this context, the advisors sense a killing opportunity, or more pertinently, an opportunity to make a killing.

It is key to note that the opportunities in the next 12-18 months are not confined to the UK. Recent deals in Europe include UBS tapping Sauerborn Trust in Germany, ABN Amro nabbing Bank Corluy in Belgium, Barclays’ French deal for ING Securities Bank, KBL European Private Bankers purchasing Bank Puilaetco in Belgium, Banco Santander snapping up Bankia Bank, and the future deals and opportunities that could be on the table, according to our analysis of the market, could mean wealth management becomes an M&A buffet. There had better be enough deal signing ink in the pot.