New Paradigm in Asset Manager M&A: Financial Institution Alliances with Hedge Fund Managers
November 2010
The Hedge Fund Journal
Following a several year lull in alternative asset manager acquisitions, a number of financial institutions are again beginning to look for sizeable investments in, and sometimes control of, alternative investment managers, while certain institutions, primarily banks, are considering spinning off their managers, but nevertheless holding onto sizable positions in the managers.
This article focuses on the foregoing development and the myriad of complexities that parties face in putting their deals together. The article describes the challenges presented by these transactions and some of the structures and methods used to balance the competing interests of the buyers and selling equity holders. Among the topics also discussed are the challenges of client consents, the impact of bank acquisitions of alternative asset managers (including the frequently misunderstood restrictions of the Volcker Rule) and developing tax legislation that could impact these transactions.
The authors of this article are from the firm’s business transactions, investment management, tax and bank regulatory groups that have represented the buyers or sellers on many of the hallmark alternative asset manager acquisitions.