Mid-Market Asset Management Continues its Consolidation
Mid-market asset management M&A valuations exploded in 1H17 compared to the same period in 2016 and 2015, as firms sought to scale up in a highly competitive environment. During the first half of 2017, the mid-market produced 36 deals, slightly down from the previous two years. Using a 90% confidence interval for a sample of deals during this period revealed the mean valuation ranged between USD 130.5m to 231.5m per transaction, an 8% increase on the high end over the first-half period in 2012, which experienced a higher value total. Retail wealth management firms are competing against popular index funds and cutting-edge fintech companies that provide robo-advising, putting downward pressure on fees. Market observers are expecting these market conditions and others to spur additional industry consolidation over the next year or so.
Please join the Mergermarket and Kramer Levin Naftalis & Frankel teams along with esteemed panelists to explore the trends, drivers, risks and rewards in asset management consolidation. Discussions will include, but not be limited to:
- What terms and conditions are being included in integration planning, pre-signing of deal?
- How are asset managers controlling for operational stability and messaging to the market at the beginning of an integration process?
- What demographic trends and technologies are asset managers facing that are challenging their business model?
- How are firms reducing operating leverage through tie-ups? What other synergies are firms finding in the current environment?
- How are asset managers incorporating fintech into mergers in order to achieve cost savings and enhance the client experience?
- Why are domestic deals being favored vs. cross-border transactions in the past year? Will the trend continue?
Director of Corporate Strategy, BlackRockZinovy Iosovich
Principal, Focus Financial Partners
Zinovy is responsible for business development and acquisition activities focused on identifying high-quality RIAs to join the Focus partnership. Zinovy also works closely with several Focus partner firms providing strategic guidance and support on organic and acquisition-based growth initiatives.
Prior to joining Focus, Zinovy was a Vice President with Keefe, Bruyette & Woods, Inc. (KBW), a top-ranked M&A boutique focused on financial institutions. At KBW, Zinovy worked in the investment banking division where he executed numerous M&A, equity and debt transactions. Additionally, Zinovy worked in KBW’s private equity arm where he focused on identifying, structuring and executing growth capital investments for financial services firms. Prior to KBW, Zinovy was an Analyst in the investment banking division of UBS covering financial institutions and began his career in a corporate rotation program with Bank One (a predecessor of JPMorgan Chase) having worked in various functions including corporate development, finance and marketing.
Zinovy received his MBA from the Kellogg School of Management at Northwestern University and a BS from Lehigh University. Zinovy lives in New York City with his wife and enjoys skiing, traveling and cooking.Wesley Fox
Managing Director, Investment Banking, Keefe, Bruyette & WoodsErnest Wechsler
Partner, Kramer Levin Naftalis & Frankel LLP
Ernest S. Wechsler counsels strategic businesses and private equity and hedge funds in mergers and acquisitions, joint ventures, minority investments and corporate restructurings, as well as in general corporate matters. Mr. Wechsler advises companies in a range of industries, including financial, technology, and manufacturing.
Mr. Wechsler’s recent transactions include representing:
- BlackRock Inc. in its acquisition of Cachematrix, a leading provider of financial technology which simplifies the cash management process for banks and their corporate clients.
- BlackRock Inc. in the acquisition of FutureAdvisor, a robo-advisor based in Silicon Valley.
- BlackRock Inc. in a transaction with Bank of America to transfer investment management responsibilities of approximately $87 billion of assets managed by Bank of America.
- BlackRock Inc. in its strategic investment in iCapital Network, a financial technology platform focused on democratizing access to alternative investments.
- BlackRock Inc. in its strategic investment in Scalable, an Anglo-German robo-advisor.
- The majority equity owners of Stanley Martin Communities in its sale to Daiwa House USA.
- AmTrust Financial Services Inc., a multinational insurance holding company, in its acquisition of Warranty Solutions, a Wells Fargo company.
- ACP Re Ltd., a Bermuda reinsurer, in a merger to acquire all of the outstanding shares of Tower Group International Ltd., a publicly traded, Bermuda-based holding company for numerous property-casualty insurers and reinsurers.
- National General Holdings Corp., a specialty personal lines insurance holding company, in its pending acquisition of Elara Holdings Inc., the parent company of Direct General Corp., a Tennessee-based auto and life insurance company.
- Sentinel Capital Partners in its acquisition of Revenew International LLC, a Houston-based provider of cost recovery and containment services relating to procurement and payment processes.
- Focus Financial Partners in the transaction under which Brownlie & Braden joined the Focus partnership.
- Focus Financial Partners in the transaction under which Kovitz Investment Group joined the Focus partnership.
- Millennium Partners in the sale of its Sports Club/LA and Reebok Sports Club/NY health and fitness club business and certain related assets to Equinox Fitness.
- Community Veterinary Partners in its sale to Cortec Group.
Mr. Wechsler routinely represents private equity funds, hedge funds and other asset managers in joint ventures and investment transactions. His representative clients in these areas include BlackRock and MSD Capital.
Mr. Wechsler has been recognized as a leading lawyer by Chambers USA (2011-2015), Chambers Global (2011-2017) and Legal 500 US (2010, 2013-2017). In 2015, Chambers USA said he is “respected by sources for his ability to ‘understand the business aspects of deals in a way that other lawyers don't.’” Legal 500 reported in 2015 that he “stands out” as a “highly experienced adviser.”