In the case of Standard Life and Aberdeen, the rationale was they each had something the other needed. Aberdeen had a strong emerging markets offering that Standard Life was lacking to build a more diversified investment platform. Standard Life had the reach and distribution Aberdeen desperately needed to offset the redemptions it felt in other areas.
But asset gathering for the sake of it will not help fund groups trying to remain lean and competitive, argues Dampier.
“Having a huge amount of AUM isn’t always good for the clients. It depends on how you approach the situation. From a consumer point of view, the jury is still out on Standard Life and Aberdeen.”
There is also a host of potential conflicts, such as product overlaps, differences in investment strategy and culture, which could cause clients to pull money out. Even something as basic as the location of the new company headquarters could prove to be a contentious issue.
Dampier adds: “Quite often, M&A doesn’t always mean you come out the better for it. Sometimes it’s more of an ego trip for the CEO than anything else.”
At present, it is impossible to say for certain that the asset management industry of the future will be populated solely by behemoths and boutiques, with the mid-sized players squeezed out. But the industry is bracing itself for change and the compromise that M&A inevitably entails.
Time will tell if the current and future M&A deals between fund houses are a match made in heaven or not.
