Growth, not just survival, is an emerging aim of M&A

Tom Burroughes

26 August 2009

Putnam Lovell says the tide is shifting to buys in the name of expansion. With capital markets apparently on the mend, M&A activity in financial services will be increasingly driven by buyers seeking growth rather than cash to survive, according to Jefferies Putnam Lovell , an investment-banking subsidiary of prime brokerage Jefferies that focuses on asset-management and financial-technology firms.

More buyers

Though divestitures made with a view to bolstering deteriorated cash positions will still account for the bulk of assets changing hands in the next 12 months, the pace of M&A activity driven by firms looking for new markets and improved investment capabilities will pick up.

"There is growing confidence the worst of the economic crisis has passed and would-be buyers are re-emerging," says Aaron Dorr, a managing director of New York-based JPL.

Among its findings, JPL said financial institutions trying to sell captive managers will retain minority stakes to participate in economic upside, bridge pricing gaps, and cement strategic and distribution links. Resurgent asset inflows and the wide gap between listed and private sale multiples will lead managers and their corporate parents to consider the public markets again in late 2009 and early 2010. -FWR

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