Merger and acquisition activity in the international wealth management sector shot up in the second half of 2009, with $488 billion in private client assets under management changing hands, according to new research from Scorpio Partnership, a business consultancy in London. Of that total, $458 billion went to new owners.
The study found that 31 major deals were announced in the third and fourth quarters of 2009, compared with 12 during the first half of the year. The total value of second-half deals was $23 billion, compared with less than $1 billion for deals in the first and second quarters. Average deal values leapt from an average of $250 million at the end of 2008 to nearly $3 billion in the fourth quarter of 2009.
Scorpio cited three macro drivers for the resurgence in deal activity: the market's rebound from the downturn and general increased levels of confidence; government interventions; and the reentry of financing in the capital markets. Starting in early 2009, these factors offered hope for a deal-making recovery, Scorpio said.
Then in the second half, other factors kicked in as the market began to reengage with deals that fitted with the strategic orientation of their business models. According to the consultant, these included a focus on cross-border deals into markets of opportunity, especially Asia/Pacific; consolidation and requirement for scale in domestic markets; and the increasing burden and expectation of stricter regulatory environments. Also spurring deal activity were the need to ensure access to distribution, especially offshore going onshore, and government-led attacks on offshore jurisdictions and the offshore business model.
Michael S. Fischer (firstname.lastname@example.org) is a New York-based financial writer and editor and a frequent contributor to Wealth Manager.