US Asset and wealth management deals insights: Q4 2019

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Asset and wealth management deal volume, value hit records in 2019

Asset and wealth management finished 2019 on a strong note, with 50 reported deals during the fourth quarter. The robust performance pushed up volume for the year to a record 212 transactions. Deal value also hit a record in 2019. Disclosed transaction value totalled $41.6 billion, more than twice the 2018 level. The $26 billion purchase of TD Ameritrade Holding Corp. by Charles Schwab Corp. in November fueled the surge.

We expect the dealmaking momentum to continue. Persistent fee pressure, declining AUM at many firms, and a convergence of AWM and insurance will be big challenges for second- and third-tier firms, likely making 2020 another blockbuster year for consolidation and more AWM deals.

“The AWM sector continues to consolidate, driven partly by the stark fact that AUM has shrunk at 30% of mutual fund managers during the past five years. We estimate that by 2025, at least 20% of fund managers will be acquired or eliminated.”

Greg Peterson, Financial Services Deals Leader

Trends and highlights

Wealth management

Wealth Management transaction volume rose during Q4 compared with the prior quarter, rounding out 2019 at a record 105 deals. At the same time, total disclosed deal value fell during the year compared with 2018. A large proportion of deals involved the acquisition of small, family office wealth managers, and the value of these transactions is often not publicized. The wealth management sub-sector continues to be driven by consolidation and “repeat acquirers.” For example, Mercer Global Advisors Inc. reported four acquisitions during the fourth quarter. We expect the healthy volume of transactions to continue in 2020.


Traditional Asset Management deal volume remained flat at 14 during Q4 compared with the previous quarter. In contrast, deal value surged 3.8x in 2019 compared with 2018 driven by Charles Schwab’s acquisition of TD Ameritrade for $26 billion in November — one of the largest acquisitions in any industry. Excluding the Schwab/TD mega-deal, the total values recorded in Q4 and all of 2019 were relatively low. We expect deal volumes to rise further in response to pressure to scale and improve margins. At the same time, we believe some managers may rush into deals to remain competitive, thereby reducing value multiples.


There were only nine announced transactions in the Alternative Asset Management sub-sector during the fourth quarter, down from 11 in the previous quarter. Deal volume sagged largely because of a significantly lower number of hedge fund and CLO deals. An increase in private equity investments (primarily minority investments) was not enough to offset the broader decline. Full-year deal volume was essentially unchanged from the previous year — but  the full-year disclosed deal value exceeded the 2018 total by 167%, fueled by the $11.7 billion acquisition of Oaktree Capital Group by Brookfield Asset Management Inc.


The “Administration/Other” sub-sector remained relatively quiet as expected, with only one announced deal during the fourth quarter and only seven announced deals in all of 2019. For the full year, we saw $385m in deals with disclosed value; there were no such deals in all of 2018.

There were no deals with disclosed value in the second half of 2019 — and, for that matter, none in 2017 or 2018.  In light of the small size of the sub-sector, we expect total deal volume and value to remain relatively flat in 2020.

Highlights of deal activity


Key themes in 2019, Outlook for 2020

The AWM industry has never been so ripe for consolidation. Fundamental challenges to the sector’s business model and pricing structures—along with other trends discussed below—will probably trigger a wave of consolidation in coming quarters. Asset and wealth executives are busy trying to solve an array of problems. The big question is what comes next? The next wave of transformation will probably sweep across the mutual fund industry. Mutual funds will need to act decisively in order to remain competitive and relevant. Their actions are sure to drive deal activity in the months to come.

  • Mutual fund vulnerability: In a recent study we estimate that 20% of mutual fund asset managers will be acquired or eliminated by 2025. Although the industry is growing on the whole, assets are becoming increasingly concentrated among a handful of top players. We expect that trend to continue. In order to survive, active managers who experience significant investor withdrawals will need to evolve or, more likely, consolidate. We believe that managers should expect fee compression to intensify as equity markets cool down. They should not count on the tailwind of stock market appreciation to continue throughout 2020.

  • Discount brokerage price wars: Several large discount brokerages eliminated commissions on stock and ETF trades during the third quarter, following the lead of Charles Schwab. This fundamental shift in business model triggered the sale of TD Ameritrade to Charles Schwab in November in an all-stock transaction of about $26 billion. A deal of this magnitude may not occur in 2020. Still, we expect to see another round of consolidation and deals involving discount brokerages of all sizes. A number of brokerages have said publicly in recent months that they are open to a combination or other strategic alternatives.
  • Convergence of AWM and Insurance: A convergence of insurers and asset managers is blurring the line between the two sub-sectors. While this trend is not new, we have seen an acceleration of transactions between the two sub-sectors in both directions. Assured Guaranty recently acquired BlueMountain Capital Management, a credit fund manager, in an effort to diversify earnings. We expect asset managers to acquire insurance companies in an effort to boost assets under management. Such deals would also provide a stable source of capital and a long-term stream of fees. 

  • Alternative managers continue to feel performance pressures: Hedge funds in 2019 weathered another difficult year, especially in comparison with the hefty returns of public equity markets. Alternatives managers continue to feel the pressure to perform or risk investor redemptions. Persistently weak performance could prompt investors to reduce their asset allocation to this sub-sector. In contrast, we expect private equity investing to remain popular and prominently active in dealmaking. Several new asset managers entered the minority staking space in 2019, focusing on investing and providing liquidity to private equity managers. Dyal Capital Partners, a unit of Neuberger Berman, recently announced that it raised $9 billion for a new fund focused on such investments. 

  • Environmental awareness: Public concern about environmental risks is growing, and we expect that AWM will not be immune to sustainability initiatives across the corporate landscape. When making loan commitments, commercial banks have reviewed environmental and business model sustainability. BlackRock appears to be pioneering a shift away from investments that “present a high sustainability-related risk.” We believe it is only a matter of time before other firms feel the pressure to follow in BlackRock’s footsteps and bring widespread change to investing around the world.

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 December 31, 2019, 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

Greg Peterson

Financial Services Deals Leader, PwC US

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