No Match Found
Despite persistently high inflation, rising interest rates and other headwinds, the volume of deals in the asset and wealth management (AWM) sector over the last 12 months (ended May 15, 2023) was actually higher than the volume of deals announced in 2021, when more than 300 AWM deals were recorded. At the same time, the sector had several announced transactions with deal values of $1 billion or more.
The active AWM deals market has been fueled by firms that have available capital and balance sheets strong enough to help them pursue and close deals, without being dependent on external leverage. In contrast, businesses that are reliant on external financing are finding stretched valuations in the M&A market and are unwilling to close deals given interest rates, which have gone up by ~250 bps over the last 12 months. As a result, many asset and wealth managers have begun focusing more intently on finding operational efficiencies to improve profitability and drive higher valuations. Many business leaders also fear a recession in the next six to 12 months, given other macroeconomic factors.
Companies face markets being reshaped by technology and disrupted by geopolitical unrest, a global pandemic and economic shocks. As a result, CEOs are turning to transformative acquisitions to reposition and reinvent their businesses for long-term success. Companies are also beginning to crack the code on how to make big, transformative deals successful: leveraging experience, early and sustained investment in integration, and a commitment to creating and implementing new long-term operating models.
Learn more about leading practices and transformational mindsets in PwC’s new M&A integration report.
“AWM deals persisted in the first half of the year despite broad market impacts on M&A. However, as interest rates continue to climb in a challenging macroeconomic market, the impacts have also led managers to begin focusing more closely on portfolio optimization to drive profitability and higher valuations.”