DEER ISLE: Insights, Flows & Investment Trends
Private Fund Manager M&A – The Next Opportunity?
With over 5,972 private fund advisors registered with the SEC compared with only 1540 public fund advisors, the private fund industry is ripe for consolidation. Private fund advisors are those who manage private funds such as hedge, private equity, venture capital or real asset and public fund advisors are those who manage public funds such as mutual funds or ETFs.
When those advisors with more than $500 million in either public or private fund assets under management are analyzed, the case for consolidation is even greater – there are only 699 public fund advisors registered with the SEC with more than $500 million of assets under management while there are 3162 private fund advisors.
The size of the gap between public and private advisors will likely shrink through both attrition and M&A of the private fund advisors. Those advisors with significant enough assets and infrastructure to be valuable to another organization will likely consolidate while smaller advisors with less than $500 million under management will likely shrink through attrition.
According to a PwC survey of 250 asset managers, 73% are considering consolidating with rival firms over the next 12 to 24 months to gain access to new market segments, reduce competition and mitigate risks1.
This upcoming expected consolidation will also affect the ability of companies to find private funding. Larger private fund advisors generally mean companies will need to be larger and more established to obtain funding given larger funds tend to consolidate their investments into larger companies.
See below Guest Article to read more about how to get financially ready for an M&A transaction “Getting Ready for a Sale or Capital Raise? 6 Crucial Financial Due Diligence Focus Areas”
1 https://www.pwc.co.nz/insights-and-publications/2023-publications/asset-and-wealth-management-revolution-2023.html
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If you would like to discuss how we can help a fund advisor on its journey whether it is growing assets under management or selling itself – please contact us. We can be reached at info@deerislegroup.com for a free assessment of our ability to help your organization (or an organization that you know).
Capital Provider Interest: $3 to $20 million EBITDA companies in stable growth industries continue to be all the rage.
Private Funds: Funds of all types (Hedge with substantial private investments, slow-pay private credit and open-ended real estate including debt, core, core+) are all exploring semi-liquid/evergreen funds.Let us know if you want to discuss this fund structure.
Venture Capital Companies: Continue to see 90% down round “offers” for companies that are having cash flow difficulties. Venture debt is in high demand from these companies as they try to avoid dilution.
Search Funds: Overheated? We are receiving several emails per week for sponsors of search fund groups who have teamed up with a family office and are in a search for a $3 to 5 million EBITDA company.
