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Fall 2011 M&A Hedge Fund Industry Outlook

Date: Tuesday, November 1, 2011
Author: Alex Akesson, HedgeCo.Net

Madison Street Capital’s Asset Management Industry Focus Group released its Fall 2011 Merger and Acquisition (M&A) Outlook- Hedge Fund Industry, focusing on the current deal environment, buyer/seller considerations, minority interest investments and future M&A drivers.

“The transaction activity in the Hedge Fund industry, as indicated by both the number and size of completed transactions, can best be described as sluggish,” said Karl D’Cunha, Senior Managing Director and head of Madison Street Capital’s Asset Management Industry Focus Group. “However, if last year’s results have any predictive value, we can expect a surge in activity in the fourth quarter that will likely spill over into the first quarter of 2012.”

The key drivers behind M&A Activity include the following:

  •     Push for Increased Regulation
  •     Higher Valuations
  •     Tax Arbitrage Opportunities
  •     Rising Industry Consolidation

Aside from these factors, a fundamental driver will be supply and demand in terms distribution and product offering. As long as there are platforms that are continuing to expand and increase their distribution channels (and to the extent they are lacking in product diversity), there should be ample supply of target hedge fund firms to fill those gaps.

Editing by Alex Akesson
For HedgeCo.net