Scale Up or Sink Fast: Opportunities for European Fund Management Companies

Rob Owen, Caoimhe Munif, Pierre Bauwens, Charlie White

The ManCo industry has real potential for M&A activity. Our Alpha M&A SMEs across London and Luxembourg offices have shared where we see these opportunities arising for the ManCo industry and step through some best practices for evaluating them.

See our latest report for a full review.

Alpha’s View

The game is changing for European Fund Management Companies (‘ManCos’).

Size and substance are essential, in terms of staff, fund expertise, operations and relationships. They are stepping into a more strategic advisory role, providing ‘all-in-one’ solutions to service clients investing billions into complex types of funds across Europe.

Alpha believes that the industry presents real potential for deal activity.

  • There is a growth opportunity for incumbent ManCos looking to cement their place in the industry through acquisition
  • There is an opportunity for asset managers that wish to focus on their core business areas to divest an ancillary ManCo function
  • There is an opportunity for private equity firms to bring together a number of ManCos and create a scale business

Buyers who execute a coordinated set of successful deals can quickly build a strong position in a consolidating market. This requires choosing the right ‘Golden Target’ ManCo business, while making informed business decisions to maintain efficient operations as they grow.

Why Act Now?

Time is of the essence.

The most successful ManCos have a clear understanding of how to move along the consolidation curve. They will;

  • Establish themselves as ‘Super ManCos’ in key geographies
  • Capture a strategic position early
  • Grow quickly and make sustainable business decisions
  • Evolve their service offering as a ‘One Stop Shop’
  • Use data and technology to their advantage

Acquisitions offer the speed necessary to deliver on these strategic priorities before it is too late. Slow movers will miss the boat, either becoming acquisition targets themselves or simply disappearing.

How to Shape a Successful Deal?

When first approaching a deal, it is essential to scan for ‘Golden Targets’. By this we mean those ManCos whose growth can be turbo-charged, by adding fuel to an already scalable business model.

Key characteristics to look for include;

  • Acting as a strategic partner with clients and the regulator
  • Offering a suite of customizable services while putting clients’ needs first
  • Investing in skills and culture
  • Sourcing, organizing, managing and visualizing data effectively

But it is not all about the target. The buyer must also plan for post-deal. Alpha believes that key success factors for ManCo acquisitions include;

  • Identifying financial cues which guide where to focus
  • Improving how the combined business is managed and operated
  • Addressing the strategic blind-spots
  • Creating value through synergies
  • Protecting value through due diligence and integration

Why Alpha?

Alpha UK M&A: Whatever your reason for M&A activity, our entire team focuses on one industry helping clients diversify their product range, enter new geographies and obtain scale. We can support throughout the transaction, including vendor assistance, buy-side pre-deal diligence, taking control, post-deal integration and establishing strategies, to maximise value from the transaction.

Alpha Luxembourg: Alpha Luxembourg has developed a strong consulting expertise in all segments of the asset management value chain. Our Luxembourg office has a unique position in the market by advising asset managers, wealth managers, management companies and central administrations.

About the Authors

Rob Owen
Associate Director

Rob works exclusively on transaction related projects, specializing in identifying value creation opportunities. He often works on transactions which will result in a significant change to the ongoing business, either as a result of an integration and delivery of operational synergies or as part of a divestiture and carve out. Rob has worked in London and Hong Kong and advised on over 50 transactions.

Caoimhe Munif
Senior Manager

Caoimhe is an experienced management consultant with a background in Project and Programme Management and a specialism in Third Party outsourcing arrangements, from administration to fund governance and structuring. Her main focus is finding the optimal Operating Model for Asset Managers and Asset Owners alike securing operational and cost efficiencies. Caoimhe has worked with a number of institutions in the Asset Management industry reviewing and assessing their broad service arrangements with both a short and long term lens and ultimately supporting complex implementation programmes.

Pierre Bauwens
Associate Director

Pierre has 20 years of experience in the Financial Services Industry. Prior to joining Alpha, Pierre worked for Deloitte Consulting. He started his career in the Investment Management industry. His main focuses include the definition of target operating models, the selection of TPAs and the integration of Middle & Back Office activities for Fund Managers. Pierre has lead multiple successful IT and business transformation programs. In addition to his role at Alpha, Pierre is co-leading a working group at the Association of the Luxembourg Fund Industry (ALFI) focused on the digitalization of the Asset Management value chain.

Charlie White

Charlie is a Consultant at Alpha with a broad range of experience. He has worked on a variety of transformational change initiatives in the financial services industry, including post-deal integration planning and operating model design. Charlie has worked on multiple successful strategic projects in the Asset and Wealth Management industry and is passionate about data-driven consulting.