The opportunities offered by new technology, as well as the threat from innovative competitors and start-ups, are driving transformation plans
Our latest M&A survey Global Capital Confidence Barometer reveals a confident global wealth and asset management (WAM) sector well positioned for future M&A.
Following a robust wealth and asset management mergers and acquisitions market in the first quarter of 2018, the outlook for M&A remains healthy, with 51% of WAM executives expecting to actively pursue acquisitions in the next 12 months, well above the long-term average of 42%. Strong corporate earnings and an upbeat assessment of capital markets are two key ingredients for a robust M&A market and are set to underpin sustained deal activity.
Companies continue to show discipline in their approach to deals, with 69% of WAM executives indicating that they have failed to complete, or have walked away from, a deal in the past 12 months.
Transforming business portfolios
The opportunities offered by new technology, as well as the threat from innovative competitors and start-ups, are driving transformation plans, with 30% of WAM executives having already identified an asset at risk of disruption to divest during their most recent portfolio review. Read our recent report, Financial services: Global Corporate Divestment Study 2018, for more detail on how divestments can offer a route to growth. While technology is disrupting traditional business models, disruption will also create opportunities for traditional firms to partner with or even acquire new start-ups.
Redesigning business models
The WAM sector is entering a perfect storm of client, technological, regulatory, fiscal and market transformation. Some aspects of the market are converging, firms of all types are diversifying and new, innovative players are joining the space. Navigating this storm and winning the confidence and trust of the market will require radical and strategic redesigns of current business models.
Looking ahead, almost all (98%) WAM executives see the global M&A market as either stable or improving. We expect this confidence, along with market fundamentals, to support strong dealmaking in the sector in 2018. Activism will continue to be a factor as a more activist shareholder base has emerged, keenly focused on portfolio transformation and willing and able to make their demands heard.
EY Global Wealth & Asset Management Leader
Transaction Advisory Services
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