Asset and wealth management deals insights: Midyear 2020

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AWM deal value surged during the first half despite headwinds from the COVID-19 pandemic and a recession.

Asset and wealth management deals started the year on a high note with the announcement in February of two mega-deals: Morgan Stanley’s proposed $13.1 billion acquisition of E*TRADE Financial Corp. and Franklin Templeton’s $4.5 billion announced purchase of Legg Mason, Inc. Overall disclosed deal value during the first half soared to $19.7 billion, up 47% from the first six months of 2019. The onset of the coronavirus in March and April slowed the activity somewhat, but transactions rebounded in May and June. The 113 deals announced during the first half matched the tally from the first six months of 2019. We expect dealmaking to be robust during the remainder of 2020, driven by continued fee pressures and a desire by some firms to gain exposure to credit and other asset classes.


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“Dealmakers pushed ahead with AWM transactions despite the pandemic, aiming to boost returns through expansion or consolidation.”

Greg McGahan, US AWM Deals Leader, PwC

Sub-sector trends and highlights

Wealth Management

Wealth Management deal volume continued at a strong pace during the first half of 2020. Firms announced 55 transactions, a 15% jump over the second half of 2019. Disclosed deal value during the first half rose to $14.6 billion, 12.2 times higher than during the same period last year. Morgan Stanley’s $13.1 billion acquisition of E*TRADE accounted for most of the gain, followed by Empower Retirement’s acquisition of Personal Capital Corp. for as much as $1 billion. The deal by Empower, a retirement recordkeeper, highlights how some companies seek to diversify sources of earnings by expanding beyond their core products. (We also included the Morgan Stanley/E*TRADE transaction in our current report on bank deals given the firm’s operations in both banking and asset management.)


Despite uncertainty in markets and the broader economy, traditional asset management deal volume rose in the first half of 2020. We saw 33 deals announced, due to continued consolidation among mutual funds and ETFs.

As always, disclosed deal value can vary widely. Even with the Franklin Templeton / Legg Mason tie-up, reported value in 1H20 was 82% lower than the prior six months, when Charles Schwab Corp. announced plans to buy TD Ameritrade Holding Corp. for $28.4 billion. (In turn, the $4.5 billion Legg Mason deal dwarfed the relatively quiet figures from 1H19.)


In the first half of this year, there were 23 alternate asset management transactions, including minority investments in private equity and venture capital firms, along with a small increase in hedge fund and CLO deals. This was a slight uptick from the 20 alternatives deals in the second half of 2019. However, the disclosed deal value—$107m—slumped 62% compared with the second half of 2019. The terms of alternatives deals, particularly minority investments, often are not disclosed.


Dealmaking in the “Administration/Other” sub-sector was low as usual, with two announced deals during the first half of 2020. The value for just one of the deals was disclosed: $40 million. We expect that deal volume and value in the sub-sector will not significantly change during the remainder of 2020.

Highlights of deal activity


AWM deals outlook

The coronavirus pandemic confronted dealmakers with big challenges, including economic uncertainty, equity market volatility and logistical issues such as limits on travel needed to complete deal negotiations. Still, some buyers swooped in on opportunities that emerged as COVID-19 intensified new or persistent problems in the market, including fee compression.

Traditionals: Weak performance and investor redemptions continue to drive transactions in traditional asset management. Many firms aim to sharpen competitiveness by increasing scale, and we expect this objective to spur M&A during the second half. Several asset managers may seek out buyers, but not all of them are attractive acquisition targets. We expect dealmakers will focus on firms with more than just a superior record of performance. They will likely favor asset managers that offer increasingly popular products such as ESG funds.  

Minority stakes: Many buyers in recent years have taken a minority stake in asset management firms, acting on a long-term investment orientation. Private equity and real estate managers have gathered significant amounts of dry powder. We expect this trend to continue, along with the increase in deals involving minority stakes. Some sellers probably will benefit from competitive bidding and continue to have an upper hand during price negotiations.

Direct lending and credit: Some asset managers and private equity firms have launched credit platforms to take advantage of market disruption and volatility in credit spreads. Many of the firms have moved quickly, either through lift outs or by acquiring CLO managers. At the same time, asset managers have stepped up direct lending as some banks and other financial institutions have pulled back from the market.

Wealth management’s new focus: Wealth management has long been an active sub-sector for dealmaking, with aggregators and consolidators of registered investment advisors driving much of the activity. Investment in advisor platforms is now building, as shown by GTCR’s 25% minority investment in Captrust Financial Advisors and Empower’s proposed $1 billion acquisition of Personal Capital Group. We expect strategic buyers and financial sponsors to continue focusing their attention on registered investment advisor (RIA) platforms, independent broker-dealers (IBDs) and retirement recordkeepers during the remainder of
the year.

SPACs are back: A growing number of companies seeking liquidity have revived the use of special purpose acquisition companies (SPACs), whose purpose is to use an IPO to raise capital for an acquisition. Top-tier private equity firms and alternative asset managers are increasingly turning to SPACs, which lost some luster during the financial crisis. Hedge fund Pershing Square Tontine Holdings recently filed with the SEC to raise the largest-ever SPAC. Many existing SPACs will probably push forward with deals in coming months. They usually have just a two-year window—with a possible extension—in which to deploy capital.

Money market fund consolidation: Record-low interest rates have put pressure on money market mutual funds (MMFs), increasing the likelihood of consolidation. With yields low and forward interest rates suggesting that fee waivers will likely continue during the next two to three years, several sub-scale MMF players may seek to reconsider their position in this market. We expect that some financial institutions that lack scale or a strategic reason to offer MMFs could review their options and decide to sell.

About the data

We define M&A activity as mergers and acquisitions in which targets are US-based companies acquired by US or foreign buyers. We define divestitures as the sale of a portion of a company (not a whole entity) by a US-based seller. We have based our findings on data provided by industry-recognized sources. Specifically, values and volumes used throughout this report are based on announcement date for transactions, as provided by Thomson Reuters and S&P Global Market Intelligence, as of June 30, 2020, and supplemented by additional independent research.

Information related to previous periods is updated periodically based on new data collected by Thomson Reuters and S&P Global Market Intelligence for deals closed during previous periods but not reflected in previous data sets. Deal information was sourced from Thomson Reuters and S&P Global Market Intelligence and includes deals for which targets fall into one of the AWM industry sub-sectors: traditional asset management, alternative asset management, wealth management, or administration and other (such as fund administrators). Certain adjustments have been made to the information to account for transactions which our data sources classify as financial services but which we assign to technology and other sectors, or vice versa.

Contact us

Gregory McGahan

Asset and Wealth Management Deals Leader, PwC US

Arjun Saxena

Principal, Financial Services, Strategy&, PwC US

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