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January 30, 2013updated 04 Apr 2017 3:29pm

Steady rise in M&A while average price falls 46%: research

The appetite for M&A in the global wealth management industry has been steadily rising with more than $1.1trn of high net worth (HNW) assets transferred since 2008, research suggests.

By Elsa Buchanan

The appetite for M&A in the global wealth management industry has been steadily rising with more than $1.1trn of high net worth (HNW) assets transferred since 2008, research suggests.

Scorpio Partnership’s Wealth Management Deal Tracker analysis report analysed 172 noteworthy deals between the first quarter of 2008 and the second quarter of 2012, with a total price paid of $38.5bn for those 172 deals.

While wealth management firms sought a change in their models, the average AuM acquired per deal over the five year period to 2012 was $6.99bn.

 

A free fall in average price for M&A

The research also showed the average price to AuM had fallen by over 46%, to 1.98% of AuM in 2012 from 3.7% in 2008.

2009 saw an increase in Price/AuM ratio from 3.7% to 4.81%, representing a 130% rise.

The growth was partly driven by the businesses that were sold in that period, said the report.

 

UK made up 30% of deal activity

The research showed the UK accounted for 30% of M&A activity during the period, as the UK market began to consolidate long in advance of the implementation of various regulatory measurements since the Retail Distribution Review (RDR).

Countries such as Switzerland or the rest of Europe have also been witnessed a significant number of buyers and sellers: almost 50%of all deals were driven by EU entities during 2008 and 2012.

European entities have a typically higher propensity to pay out for expansion, compared with either the US or other international operators.

 

2013: busy year for M&As

Consultancy Scorpio also said 2013 was expected to be a busy year for M&A in the global wealth management sector, although "no mass rush" was anticipated.

Steady deal rise may come from growing pressures in the business models of many operators to consider a future shift in ownership, said the report.

Of the 172 deals analysed over the period, 133 were straight out acquisitions, 23 were strategic investments, seven were mergers, five were management buy-outs and the remaining four were joint ventures.

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