Welcome to the first
Wealth management insights from the corporate finance team of PricewaterhouseCoopers. It provides an overview of recent M&A activity in the wealth management sector and sets out our thoughts on what the future might hold.
The sector is gearing itself for a period of sustained growth driven by strong underlying demographic trends and more benign conditions in global capital markets. However, wealth management CEOs do not expect this growth to fully satisfy their aspirations. Recent years have seen a continuous and strong volume of M&A, as wealth managers seek to expand their product capabilities, achieve economies of scale in existing geographies and extend into new ones. We expect to see this volume continue into 2006 and beyond, fuelled by continued trade activity and increasing private equity interest.
The overwhelming majority of deals consummated to date have been truly domestic and we do not expect this to change in 2006. However, the appetite for cross-border deals has risen, in particular investment into the UK and Switzerland is increasingly being evaluated. In addition, many firms are asking themselves how to enter new markets (such as the Middle East) and others are considering how many offshore jurisdictions they need to be in.
Having experienced paying 3% of funds under management for a business with little or no profit, the industry now seems to be using a more rational approach
to valuing deals. This appears to be driving convergence between vendors’ and acquirers’ views on price. Notwithstanding this, buyers significantly outnumber sellers and consequently, we fully expect at least one organisation to pay a strategic premium for that “must have” business.
Wealth management insights complements the
PricewaterhouseCoopers global private banking/wealth management survey by expanding on the deal related aspects to offer a deeper insight into M&A activity in the sector. If you would like to talk to us about your M&A objectives or would like to comment on any aspect of this report, please a member of the team.
