Just as wealth industry M&A was picking up, economic uncertainty could kill it again

There was an uptick in the number of deals involving asset and wealth management businesses in the last few months of 2024, but the near-term outlook is uncertain.

Optimism peaked immediately after the US presidential election and deal volume rebounded from 70 in the second quarter of 2024 and 63 in the third quarter, to 80 in the fourth quarter and 85 in the first quarter of 2025, the highest level since early 2023.

The stats are from a new report from PwC which reveals that the uncertainty surrounding White House policies on trade, federal spending, and foreign policy which has fueled market volatility, AWM industry dealmaking has slowed again, at least for now.

The report highlights continued positive sentiment among industry players that there is opportunity and there is clear strategic repositioning to offer new products, access new markets, and to attract new assets under management.

In product development, this includes alternative investment products for retail investors, often through partnerships between traditional asset managers and large alternative specialists. Also, growth of semi-liquid vehicle launches, particularly tender offer funds, which offer exposure to both public and private market investments and are targeted at high-net-worth accredited investors. These collaborations aim to provide new capital sources and investor diversification.

“Asset managers are becoming diversified financial services businesses, leveraging partnerships and the capital markets to scale and grow AUM,” commented Greg McGahan, US Financial Services Deals Leader and AWM Deals Leader at PwC.

Deals in the asset and wealth management space continue to be fueled by fee pressure, the push for scale, and aging founders seeking an exit and to transition their business to the next generation of leaders.

Unlike institutional fundraising, retail distribution requires scale, personalization and easy access, prompting alternative managers to partner with intermediaries like financial advisors, fintech platforms and traditional managers already embedded in the retail space.

However, a prolonged phase of elevated interest rates and ongoing macroeconomic uncertainty has resulted in slower exit activity and increased fundraising challenges for private equity firms managing closed-end funds.