Activity slowed in March and April but bounced back in May and June, with 113 deals announced by the end of June. The consultancy group said that it expects dealmaking to stay “robust for the remainder of 2020” based on fee pressures and some firms looking for more exposure to credit and other asset classes as investors reset portfolios amid the turmoil.

PwC indicated that firms in traditional asset management will be planning to scale through merger activity to offset investor redemptions and low fees. “We expect this objective to spur M&A during the second half. Several asset managers may seek out buyers, but not all of them are attractive acquisition targets." The most attractive will be those with more than just a superior performance record. "They will likely favor asset managers that offer increasingly popular products such as ESG funds,” the group said.

Wealth management specifically saw a strong deal pace in the first six months - up by 15 per cent on the same period last year, with 55 transactions valued at $14.6 billion. The E*Trade/Morgan Stanley coupling accounted for most of these gains, followed by Empower Retirement’s acquisition of Personal Capital for a reported $1 billion. The latter deal highlights how companies are already seeking to diversify earnings by growing beyond their core services, the group added.

M&A in the wealth sector has, outside of the big-ticket examples such as those of Morgan Stanley and Schwab, decelerated somewhat in areas such as registered investment advisors, although there remain a number of deals, according to figures from ECHELON Partners, as reported here. Industry figures have told Family Wealth Report that there is a pipeline building, and a desire for consolidation, exits by retiring managers, and other factors pushing the numbers.

Other developments
Those aggregating the RIAs market are driving most of the deals in wealth management. Advisor platforms are attracting more investment seen in private equity firm GTCR’s 25 per cent minority stake in Captrust Financial Advisors, and Empower’s $1 billion bid for financial planner Personal Capital Group.

“We expect strategic buyers and financial sponsors to continue focusing their attention on RIA platforms, independent broker-dealers and retirement recordkeepers during the remainder of the year.”

In the rush for more liquidity, special purpose acquisition companies, or SPACs as they are known, are back as a way to publically raise capital for acquisitions. SPACS lost some of their luster during the financial crisis but are back in favor with top-tier private equity firms and alternative asset managers. Hedge fund specialst Bill Ackman's Pershing Square Tontine just raised $4 billion in the largest SPAC to date. Up to July, 47 SPACs have gone public raising over $18 billion, against 59 that raised $12 billion for the whole of 2019.

“Many existing SPACs will probably push forward with deals in coming months. They usually have just a two-year window—with a possible extension—in which to deploy capital," PwC said.

The group foresees a wave of consolidation hitting money market mutual funds as a result of persistent low yields and forward interest rates that are likely to fuel an era of fee waivers for the next two or three years. “We expect that some financial institutions that lack scale or a strategic reason to offer MMFs could review their options and decide to sell,” the group said.