Copyright 2010 SNL Financial LCAll Rights Reserved SNL Bank Weekly Western Edition
January 11, 2010
Financial sector M&A to rebound in ’10, Freeman & Co. says
Although mergers and acquisition activity for financial services companies declined in 2009 as much as 60% in some areas, Freeman & Co. reported that increased activity since September 2009 could indicate a more robust 2010 for transactions.
Though mergers and acquisition activity for financial services companies declined in 2009 as much as 60% in some areas, Freeman & Co. reported Jan. 4 that increased activity since September 2009 could indicate a more robust 2010 for transactions.
Despite a 179% jump in total AUM of managers involved in deals thanks in part to the BlackRock Inc. acquisition of Barclays Global Investors NA, deal volume declined 23% in the asset management space on a year-over-year basis.
Looking to 2010, Freeman & Co. projected that the need for capital could cause banks and insurance companies to assess the value of their asset management units, and deals involving between $3 billion and $30 billion in AUM should increase.
In the broker/dealer space, the number of deals fell 21% to 210, and deal value declined 79% to $46 billion. In 2010, Freeman & Co. said broker/dealer consolidation should continue, while alternative trading systems and dark pools will be consolidated or rolled up into exchange-backed or bank-backed platforms.
Deal activity in the U.S. and European insurance sectors saw both the number and value of transactions down by about half compared with 2008 levels, while private equity firms deployed $11.8 billion in 55 financial services deals in 2009, compared with $24.8 billion in 138 deals in 2008. Freeman & Co. added that in 2010, insurance companies will continue to raise capital and shed noncore assets.
Other drivers of M&A in 2010 include a resurgence in organized exchanges’ M&A activity and an increase in private equity activity in the face of waning government support of financial companies. Additionally, the report indicated that firms will review their international operations critically, and although cross-border interest may not return until 2011, domestic activity should increase in the first half of 2010.
January 15, 2010