The number of deals in the wealth management industry returned to 2016 levels for the second quarter of 2017 after a jump during the first quarter of the year, according to PricewaterhouseCoopers Q2 Assets/Wealth Management Deals Insights released Wednesday.
Deal activity dropped 32 percent during the second quarter of the year, going back to the level seen in the fourth quarter of 2016, which was one of the slower quarters last year. Twenty-eight deals were completed in the fourth quarter of 2016 and second quarter this year.
“While the overall asset management industry has been growing, active managers are continuing to struggle with declining assets as a result of continued rise of passive investing,” says PricewaterhouseCoopers. “While we expect some deals will be completed in the second half of the year, buyers and sellers are finding it difficult to agree on deal terms. We expect to see a continuation of the current choppy deal environment.”
In contrast, the first quarter of the year saw 41 deals completed. PricewaterhouseCoopers attributes the decline to uncertainty surrounding the Department of Labor fiduciary rule and the fact that for the first time since the end of 2013 there were no deals initiated by foreign buyers.
The largest deal in the second quarter was Stone Point Capital and KKR’s acquisition of the multi-boutique wealth manager, Focus Partners, which was valued between $1.6 billion and $2 billion.
Two other large deals were reported. Scout Investments was acquired by Carillon Tower Advisors for $173 million and the Wunderlich Investment Company was acquired by B Riley Financial for $67 million.