Record Financial Services M&A Deal Activity in 2006; $2.4T AUM Involved

Strategic merger and acquisition activity in 2006 reached record levels in global financial services sectors, with exceptionally strong activity in asset management, involving more than $2.4 trillion of assets under management (AUM) being acquired, according to Freeman & Co. Securities firms were involved in $89 billion of deals and private equity firms pumped in $30 billion in 96 financial services deals. 

Asset Management

  • M&A volume measured by AUM reached $2.4 trillion, up 110% from $1.1 trillion in 2005, and up 435% from $444 billion in 2004. 

  • Key deals include Bank of New York’s acquisition of Mellon Financial, involving $918 billion AUM, and Schwab’s sale of US Trust to Bank of America, involving $94 billion AUM.

  • Twenty-four deals included AUM of over $10 billion, up 71% from 14 deals in 2005, and up 118% from 11 deals in 2004

  • Deals involving alternative managers reached 55, up 45% from 38 deals in 2005, and up 57% from 35 deals in 2004

Securities Firms

  • Dollar value of M&A deals reached $89 billion, up 154% from $35 billion in 2005, and up 260% from $25 billion in 2004

  • This surge was concentrated in electronic trading & exchanges (60 deals, up 43%), investment banks (35 deals, up 35%) and diversified securities firms (36 deals, up 200%)

  • Geographically, Asia remained very strong (78 deals), Europe grew (50 deals, up 52%), and North America was down slightly (48 deals, down 13%)

Private Equity

Private equity firms were involved in some landmark transactions last year, including the acquisition of GMAC for $7.4 billion by a group led by Cerberus Capital and the acquisition of Gartmore (UK) by Hellman & Friedman for $950 million.

Private equity firms invested $30 billion in 96 financial services firms in 2006, compared to 81 transactions valued at $38 billion in 2005. Volume in 2004 was 67 transactions worth $14 billion.

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