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Asset and wealth management: Deals 2022 outlook

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What's driving deals in 2022

PwC's Deals Sector Leader John Potter and other partners discuss the deals outlook for 2022.

AWM deal-making continues to thrive

  • Despite the scarcity of megadeals relative to the high bar set by the flurry of asset and wealth management (AWM) deals that closed in 2020 (Schwab-TD Ameritrade, Morgan Stanley-E*TRADE, Franklin-Legg Mason, Invesco-Oppenheimer, Macquarie-Waddell & Reed, etc.), the volume of AWM deal-making in 2021 continued to be robust. Deal volume in the last 12 months — 296 in total — marks an apex relative to any year since the turn of the century.
  • We continue to see smaller scale consolidation, particularly within wealth management and retirement recordkeeping, propelling deal flow. Wealth management deals accounted for two-thirds of the transactions during the period, with aggregators and consolidators of registered investment advisors (RIAs) driving much of the activity.
  • Larger deals could be on the horizon in 2022 as AWM firms search for ways to add product and distribution diversity outside of traditional investing.
  • We expect many AWM firms will evaluate M&A opportunities within alternatives, which we believe could become a significant driver of deal activity — more so than typical forces such as opportunities for cost synergies and economies of scale.

Asset and wealth management deals sub-sector outlook

Intersection of traditionals and private markets

This year, there has been no shortage of investment activity in the private markets. Private equity (PE) in particular has accounted for a record proportion of deal-making, spurred by low interest rates and record fundraising. The US PE market topped $4 trillion in assets under management (AUM) in 2021, having grown at about 15% compound annual growth rate (CAGR) over the last five years, and nearly half of that comprises uninvested dry powder, presenting enormous future investment opportunities for PE managers.

As PE has boomed, so too has private credit, with a focus on sectors where banks have faced regulatory or risk-related concerns, and mid-market firms, which may not have ready access to the bond market. Funds that provide leverage for PE buyout deals have been inundated with investment opportunities, especially as traditional banks and other financial institutions have pulled back from direct lending. The private credit market currently stands at about $700 billion of AUM, and we predict that figure will grow 2.5 times to $1.8 trillion by 2025.

Given the strong inflows, significant future growth prospects and track record of delivering superior risk-adjusted returns of such funds, we expect traditional asset managers will seek to break into or expand their existing footprints in the private markets sector. Firms are continuing to look for ways to fill gaps in product offerings and provide “one-stop shopping” for their clients, who are increasingly interested in gaining exposure to various asset classes without having to invest across multiple firms. We’ve already seen a beginning to this trend late in 2021, highlighted by T. Rowe Price’s announcement in October that it will acquire credit manager Oak Hill Advisors for $4.2 billion and Franklin Templeton’s announcement in November that it plans to acquire PE secondaries business Lexington Partners for $1.8 billion. These deals also provide traditional firms with the diversification they need to combat the pressures of the continued investor shift away from actively managed products such as mutual funds.

While valuation multiples may be prohibitive for some, we expect larger firms with significant buying power to lead the way with majority takeovers. However, don’t be surprised to see mid-sized AWM firms dip their toes into the alternatives market by buying or building captive minority investment platforms, which have increased in popularity. Minority investments provide acquirers with attractive yields that liquid products struggle to match, while providing sellers with a solution to succession planning concerns and/or partial liquidity options for founding partners who want to avoid the complexities that might accompany a public offering.


It has been over a year since the start of the SPAC resurgence, and many vehicles are naturally creeping closer to the end of the typical 18-to-24-month time frame in which a deal must be completed before proceeds are to be returned to the public shareholders. We continue to see SPACs face similar challenges, including inability to secure private investment in public equity (PIPE) financing. Nonetheless, with the window of opportunity closing for some SPACs, we expect deal volume to continue to surge as sponsors rush to get deals done. But be warned: This dash to the finish line could lead to sacrifices in deal quality due to a confluence of factors, including limited diligence under compressed time frames, the asymmetric incentives that SPAC promoters face coupled with a seller’s market where SPAC targets have the ability to pit competing SPACs against each other to get the best terms for their current shareholders.

Wealth management

  • Wealth management continues to be an active subsector for deal-making, with aggregators and consolidators of RIAs driving much of the activity.
  • Roll-up players (e.g., Focus Financial, Hightower) have been joined by a new set of private equity-backed players which have raised significant funds within the last 12 months and are pursuing the same roll-up strategy (Creative Planning, CAPTRUST, AllWorth Financial, CI Financial).
  • Following in the footsteps of Empower Retirement, Personal Capital, and Morgan Stanley (E*TRADE), there is also a long tail of digital brokerages and robo-advisors actively looking to sell themselves, taking advantage of high valuations and potential revenue synergies with larger wealth managers.

Crypto-focused businesses

Cryptocurrencies continue to pique the interest of retail investors. We expect rising inflation concerns in the US to exacerbate this trend, as investors look for avenues to shield against US dollar devaluation. Crypto markets, however, have largely been inaccessible to the average retail investor unfamiliar with or intimidated by crypto exchanges. However, with Coinbase, Square, PayPal and Robinhood now offering app-based access to crypto investing to more than 100 million US retail investors on their platforms, and with the launch of the first SEC-approved Bitcoin-linked investment product — ProShares’ BITCO Bitcoin exchange-traded funds (ETF) was approved by the SEC and launched in October — the barriers to entry have been reduced.

We are already seeing asset managers searching for ways to provide their clients access to crypto products, and platform providers such as Interactive Brokers rolling out a crypto investment platform offering for RIAs. The challenge for most traditional alternative firms is their lack of infrastructure to do so, and so M&A opportunities or other partnerships with existing crypto managers and custodians may emerge.

Successful IPOs by Coinbase and Robinhood, as well as the continued rise in the values of the most popular crypto tokens (Bitcoin, Ethereum, Tether, Solana plus a host of memecoins) has driven significant funding interest from venture capital (VC) and growth equity providers in a host of crypto-focused businesses whose business models resemble those of traditional brokerages, custodians, exchanges and asset managers. Several have achieved decacorn or unicorn status in 2021 including the likes of Binance, Bitmain, Bitpanda — all with significant VC investments. Two prominent firms (Circle and eToro) have announced special purpose acquisition company (SPAC) IPO deals which are likely to close in the next few months, and more are likely to follow their lead.

Foreign interest in U.S. AWM markets

Acquisition activity by foreign investors across the U.S. AWM market has been limited in recent years. If anything, US wealth management has seen significant exits by the likes of Credit Suisse, Barclays and TD Group, which were only partially offset by incoming investment interest by Macquarie, IG Group and CI Financial. However, the tide appears to be turning toward more foreign direct investment. We are observing increased interest among Asia-based firms, Canadian players and even some European firms — investment managers and other financial institutions alike — in the U.S. AWM market. It may take time for these foreign investors to learn enough about the U.S. market to become comfortable with consummating a deal. Valuation multiples and cultural differences could also prove to be an impediment to a majority takeover. However, we expect to see more foreign investors taking minority equity stakes in U.S. asset managers.

Retirement recordkeeping

The long tail of retirement recordkeepers beyond the top-ten players makes the sector ripe for continued consolidation, led by players such as Empower Retirement and Ascensus. We see a confluence of drivers spurring additional deal-making:

  • Increasing pricing pressure as leading players continue to price aggressively to win new business away from competition. The industry’s move in the direction of a “per participant” pricing model could be challenging for some providers.
  • Technology/workflow capabilities which help drive productivity. Many larger firms can now afford technology budgets that are 3 to 10 times what the next tier of competitors can afford. Meanwhile, some offshore technology vendors have been able to commit to a 30% cost reduction per participant, or more, through long-term outsourcing contracts.
  • Continued interest from PE firms given the stable fee-based cash flows from recordkeeping offerings. These firms also find these deals more attractive by laying off longevity risk to PE-owned reinsurance players which have been active in the market (e.g. Athene, Venerable, Aspida, Financial, Fortitude Re).
  • Adjacent sectors, such as health savings accounts, rollover IRAs, benefits administration and retirement plan advisory are also seeing consolidation pressure given pressure on topline (lower net interest income on cash balances, commuter benefits and debit card interchange negatively impacted by the pandemic-driven, working-from-home trend.)

“Larger deals could be on the horizon in 2022, as AWM firms search for ways to add product and distribution diversity outside of traditional investing.”

— Greg McGahan, US Financial Services Deals Leader and AWM Deals Leader

Key deal drivers

Navigating policy uncertainty in a midterm election year

Given the recent bipartisan passage of the Infrastructure Investment and Jobs Act, which will direct $1 trillion in funding towards transportation, utilities and broadband, we expect to see a significant uptick for businesses in the infrastructure industry and the funds that back them. Many asset managers are already betting big on infrastructure. While some may choose to build organically — for example, Blackrock recently announced that it has raised nearly $700 million for a climate-focused infrastructure fund — we expect AWM firms that lack the expertise in the sector to look to M&A as a tool to gain exposure to these assets.

Committing capital to growth

The use of M&A as a mechanism to expand into new product classes and drive growth continues to be prevalent among asset and wealth managers. While majority takeovers have historically been a common path to expansion, we are seeing certain players turn their attention to finding and investing in strategic partners or tuck-in deals to help fill existing product gaps and deficiencies. This is particularly the case for smaller players who have found recent sky-high valuation multiples. JPMorgan, Morgan Stanley and Blackrock have all made tuck-in acquisitions to add personalized custom indexing capabilities over the last 12 months, for example. We expect to see a continuation of these partnerships and similar tuck-in deals between platforms with complementary product offerings.

Contact us

Gregory McGahan

Gregory McGahan

Asset and Wealth Management Deals Leader, PwC US

Arjun Saxena

Arjun Saxena

Principal, Strategy&, PwC US

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