This edition of the Capital Confidence Barometer reveals sustained optimism among global wealth and asset management (WAM) executives.
Following a robust WAM M&A market in 2016 and 2017 the outlook for dealmaking remains healthy with 54% of WAM executives expecting to actively pursue acquisitions in the next 12 months — well above the long term average of 47%.
Dealmaking at the forefront of boardroom thinking
As corporate and capital market indicators support investment plans, WAM executives are looking for growth opportunities utilizing M&A, joint ventures and alliances to supplement organic growth. Underpinned by confidence in the outlook for equity valuations and corporate earnings, 67% of WAM executives expect their M&A pipeline to increase over the next 12 months.
Anticipating integration challenges
In this increasingly complex and globalized M&A environment, which key factor do executives need to consider when structuring a transaction? More than half (52%) of WAM executives say anticipating the full range of integration challenges and opportunities ahead of the deal could determine success. Read our recent report, M&A integration in wealth & asset management, for more detail on how well prepared integration plans and advanced analysis can help asset managers deliver returns on investment from day one, while simultaneously ensuring ongoing operational stability.
Business models under pressure
WAM executives look to be on the front foot in the face of disruption, with 65% taking proactive measures to counter the impact of digital transformation on their business model. At a time of increasing automation, technology puts focus on reskilling staff and developing in-house digital capabilities. While nearly a third of WAM executives are pursuing deals to gain market share, 34% say the main driver is acquiring for technology or talent, demonstrating a continued interest in “acqui-hire” deals.
Looking ahead, almost all (95%) of WAM executives see the global M&A market as either stable or improving. We expect this confidence, along with market fundamentals to support strong dealmaking in the sector. Shareholder activism will continue to be a factor for boardrooms as 93% expect the number of companies impacted by shareholder activism to increase or stay the same.
EY Global Wealth & Asset Management Leader
Transaction Advisory Services
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