Firms that buy asset managers typically pay too much for less-profitable firms, according to a new report from consulting firm Cerulli Associates. In addition, the report says that many newly acquired subsidiaries grow more slowly than their peers.
The report, which examined more than 300 fund management mergers and acquisitions since 1990, found that about 65% of the firms that were examined didnt grow faster than industry benchmarks. What is more, about half of the acquired asset managers that fell behind the industrys overall growth curve had been outpacing the industrys growth before they were bought, the report said.
Because of that, the report contends that organic growth is the best bet for expanding an asset management enterprise.