Investment firms will continue to hone their specialties and look to raise capital through mergers and acquisitions throughout the rest of the year, according to a report by Jefferies Putnam Lovell.
M&A activity in the beginning of 2008$10.6 billion spent in 104 dealshas been lower than the first half of 2007$36.9 billion in 115 years, according to the investment banking firm, primarily due to smaller transactions, more focus on alternatives and no fund company initial public offerings.
Nonetheless, Jefferies expects deals to pick up in the next six months.
Pursuit of non-traditional investment products, international expansion, and attempts to restore balance sheets at banks and other financial institutions will drive asset management dealmaking activity in the months ahead, said Aaron Dorr, a managing director at Jefferies. In the financial technology arena, strategic buyers will show enthusiasm for select technology vendors that appeal to the buy side, custodians and exchanges.
Nonetheless, the company expects deals will take longer to complete and run a higher risk of collapse. Prices will also begin to go all over the map as purchasers exercise discretionary buying power and aggregate multiples for asset managers soften.