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Alternative Market Briefing

Asset management M&A remains elevated despite pandemic

Thursday, March 11, 2021

Bailey McCann, Opalesque New York:

M&A within asset management is continuing at an elevated rate despite the pandemic, according to a new report from investment bank Piper Sandler. 256 asset management transactions were completed in 2020, a 5% decrease from 2019 but a continuation of higher than average deal volume.

Wealth management deals accounted for 60% of activity last year - up from 56% in 2019.

The number of deals involving alternative investment firms is also elevated compared to historical norms, although the number of transactions declined to 51 in 2020. Investor appetite for private credit and real estate firms has driven the growth in these transactions for the past three years.

The one weak spot within the alternatives landscape is hedge funds. Sluggish performance throughout the pre-pandemic period sent buyers looking for other targets. Performance rebounded in 2020 amidst market volatility reminding some investors why hedge funds can be beneficial, but the report notes that the bar remains "extremely high" for potential buyers before they get interested. Hedge fund strategies must be heavily differentiated and the manager uniquely well-positioned to support future growth.

Minority stake transactions remain the most popular route for deals involving alternative asset managers. Minority stake sales represented 63% of alternative transa......................

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