Investment Industry M&A Activity Continues to Percolate

Investment Industry M&A Activity Continues to PercolateOn August 10, the Wall Street Journal reported that mergers and acquisitions (“M&A”) in 2015 were on pace to break 2007’s record-setting year. While this increase in activity has fueled returns for event-driven and merger-arbitrage strategies, it has also encouraged firms in the asset management industry to engage in M&A of their own.

M&A activity peaked in 2007 directly before the financial crisis, and the Journal’s article was published just hours before China devalued its currency and set off a massive global selloff in risk assets. Despite this, M&A activity in the asset management industry should continue to be strong due to several strong trends: The continue growth of the ETF industry, an ongoing movement of assets into alternatives, and the emergence of online financial advice. Two of these trends are reflected in the deals outlined below.

Ramius/Caerus

On August 20, Ramius LLC, the global investment management business of Cowen Group, announced its partnership with Caerus Investors, a consumer stock-focused alternative investment manager. Caerus will join Ramius’s alternative investment platform, and Caerus founder and CIO Ward Davis will also be joining Ramius, along with co-portfolio manager Brian Agnew.

“Ward, Brian and their team have an impressive track record managing consumer focused long/short equity portfolios,” said Ramius CEO Michael Singer. “Ward and Brian have clearly shown the ability to generate outstanding risk adjusted returns, and their strategy resonates with the needs of our global base of clients.”

BlackRock/FutureAdvisor

BlackRock, a much bigger player in the broader investment world, recently announced that it had entered into a definitive agreement to acquire digital-wealth-management firm FutureAdvisor. Once the acquisition is completed, which is expected to be in the fourth quarter, FutureAdvisor will operate as a business unit within BlackRock Solutions (“BRS”), expanding the firm’s ability to meet the needs of financial institutions looking for a digital-advice platform to increase customer loyalty and grow advisory assets.

“BlackRock Solutions has a history of offering technology and advisory services to a broad range of institutions,” said Robert Goldstein, Chief Operating Officer and global head of BRS, in a recent statement. “The acquisition of FutureAdvisor is an extension of BRS’s mission to help clients solve their most complex investment challenges through technology.”

As the market for online advice grows, other platforms will likely seek to partner with larger firms that can bring broader brand recognition and distribution to the table.

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