Using Institutional Data to Evaluate M&A Opportunities

02 Jul

Using Institutional Data to Evaluate M&A Opportunities

Investment professionals, financial executives and mergers and acquisition execs are increasingly using “alternative” data to get a competitive edge. Satellite images of shopping center parking lots, trucking schedules, mobile phone usage patterns and more can offer insights that create an edge in finding investment opportunities, vetting acquisition targets and closing deals.

eVestment clients are increasingly using eVestment’s unparalleled data on the institutional investment business as an alternative data source in identifying and assessing potential acquisition or merger targets around the world as the asset management business continues to evolve.

“Clients tell us they’ve used eVestment to vet firms as they look to build their product line up, geographic reach or capabilities through a merger or an acquisition,” said John Molesphini, eVestment’s global head of strategic engagement. “So, in addition to being among the top solutions for investment managers, investors and consultants to share information and connect, we’ve increasingly become a source of alternative deal-making data as M&A activity in the asset management space heats up.”

eVestment’s new whitepaper, “M&A in the Asset Management Space: Using Institutional Data to Evaluate Opportunities,” highlights the disruption and evolution of the asset management industry and the unique ways eVestment data is being used by firms seeking to build their brands through a merger or an acquisition.

Some ways eVestment data can help identify and assess M&A targets include:

  • Retail and institutional investors have different time horizons and behave differently, so knowing a target firm’s retail/institutional AUM ratio, which eVestment tracks, can impact long term projections of growth and flows, and thus financials of a deal.
  • Client retention can be a key driver of long-term value in an M&A deal as well. A target firm may provide information on its client retention during the M&A process, but that information is of limited value in a vacuum. By comparing the target firm’s client retention to peer firms with eVestment data, the potential acquirer can better understand if the firm they are evaluating has higher or lower client retention compared to similar firms.
  • A firm looking at acquisition targets may be looking to broaden its product breadth, geographic reach and key professional expertise. eVestment tracks information like firm investment strategies, office locations and key professionals’ background, giving an acquirer opportunity to better understand how target firms might complement their own expertise, personnel and reach.

“With recent asset management M&A deals carrying multi-billion-dollar price tags, any additional source of data that can help the firms or their investment bankers assess the best targets for acquisition and the valuation of those deals is crucial to making the best deal possible,” said Molesphini. “It’s really exciting to see how our clients are using our unique data and analytics capabilities in this way.”

To download a copy of the new whitepaper, please click here.