Are we about to see an uptick in US asset and wealth management M&A?

The challenging conditions for dealmaking in the asset and wealth management industry has been evident again in recent quarters, with uncertainty around interest rates and the presidential election dampening M&A activity.

But as we head into 2025, will the industry see an uptick in deals with the election outcome known and at least some expectation that rates are on the way down?

PwC’s new asset and wealth management US Deals 2025 Outlook has just been released and notes that there were 79 announced AWM deals in the first quarter of 2024 but this dropped to 70 in the second quarter, and 63 in the third quarter.

The trends driving M&A in the AWM industry include a desire to boost revenue through expansion into new products (e.g. retail-oriented semi-liquid vehicles) and markets, for example traditional asset managers expanding into alternative asset classes (such as private credit), and existing alts firms enhancing their offerings. Competition in the private credit space could drive greater consolidation.

With investors seeking alternative routes to bigger returns, the report finds that those firms with private market or real-focused product suites have had an easier journey to AUM growth and fundraising.

“We expect asset and wealth managers will continue to look to M&A to drive business growth and transformation notwithstanding the more recent challenging deal environment,” said Greg, McGahan, US Financial Services Deals Leader and AWM Deals Leader.

For wealth management business, consolidation has helped gain access to new markets, expand service capabilities, and benefit from operating scale.

There has also been a trend for banks to partner with private credit managers with the former having the larger client base and the latter taking on the management and risk of loans.

Finally, succession planning has been key for larger firms with aging founders keen to protect what they have built.

“Private market investors’ desire for greater liquidity and the ways in which AWM managers offer it, either via the use of continuation vehicles or the development of semi-liquid products with exposure to private market investments, will be important to monitor in the coming months. We expect these trends to impact AWM dealmaking,” the report states.