M&A Among Investment Firms Picks Up

July 14, 2003, 1:00 a.m. EDT 1 Min Read

Due to the improving stock market, merger activity among U.S. investment firms is starting to show more life, Reuters reports.

Timothy Stives, managing director at Ashland Management, said he thinks bigger companies will acquire weak mutual fund and investment management firms that are not suited to survive the next bull market.

Recent acquisitions have included American Express purchase of UK fund manager Threadneedle for $570 million and Charles Schwabs U.S. Trust units pending acquisition of State Streets private asset management business for $365 million. Lehman Brothers is currently in talks to buy Neuberger Berman.

"Investment banking has been on hold for 2-1/2 years," said Steven Smith, executive vice president at Brandywine Asset Management, told Reuters. "People are now lining up and starting to do deals. They know their weaknesses and the niches they need to fill."

A noticeable trend is the acquisition of firms that cater to high-net-worth , as evidenced by Lehmans potential purchase of Neuberger Berman. Two firms that would be potential takeover targets are Northern Trust and Bessemer Trust, both strong in the high net worth category, according to mutual fund consultant Burton Greenwald.