Freeman & Co. Reports Record 2007 Financial Services Deal Activity and
Projects Continuing Trends Will Produce Robust Strategic Deal Volume in 2008
NEW YORK, Jan. 2 /PRNewswire/ -- Merger and acquisition activity in 2007
reached record levels in a number of financial services sectors, Freeman & Co.
LLC, a leading independent advisor to the financial services industry,
announced today.
Releasing its annual summary on mergers and acquisitions in the financial
services industry, Freeman reported that activity was strong in both asset
management, with more than $1.4 trillion of assets under management (AUM)
being acquired, and in securities firms (including exchanges) with $135
billion of deals. Private equity firms(1) deployed $69 billion of capital in
122 financial services deals. As detailed below, some figures represent record
levels of investment in many industry segments.
Looking ahead to 2008, the Freeman & Co. report projects that strategic
deal volume will remain strong and that the key drivers in these industry
sectors will include:
-- A drive by alternative asset managers to consolidate, secure strategic
minority investors and consider public listings to increase size and
scale globally
-- Sovereign wealth funds will further extend their reach as major
investors in the financial services industry
-- Private equity and hedge funds will increase their investments in
financial services as the credit crunch causes disruption presenting
investment opportunities
-- Broker dealers will readjust their risk profile and review the scale of
their global platforms
-- Broker dealers will further integrate their research, electronic
trading and prime broker services as hedge fund and alternative asset
manager customers demand a greater suite of offerings
-- Electronic trading and exchange consolidation will continue as global
leaders seek to extend market positions
-- In the insurance sector, rapid growth will continue in capital markets
activity involving insurance linked securities, mortality and longevity
hedging, CAT and mortality bonds, and sidecars
-- Life settlements and premium financings will further grow as regulatory
pressures subside
-- Cross border middle market M&A activity will remain strong as strategic
considerations continue to drive transactions
"Credit crunches are always painful, expose unexpected pitfalls, and are
rarely short lived," said James L. Freeman, the firm's founder & Chief
Executive Officer. "As 2007's subprime upheaval migrates into the corporate
credit markets in 2008, we believe major opportunities will arise for
established, well financed firms to consolidate their leadership position.
Darwinian economics as against the rising tide environment we have experienced
for the last five years should bring major changes in the strategy for the
financial services industry."
Eric Weber, Managing Director & Chief Operating Officer, added, "2007
represented two distinct halves: a growth phase followed by a stressed phase.
In 2008, we expect to see activity driven initially by the market stresses,
including divestitures and continued minority investments followed by more
strategic acquisitions and cross border deals later in the year."
2007 HIGHLIGHTS
Asset Management
-- M&A volume measured by AUM reached $1.4 trillion, down 38% from $2.2
trillion in 2006, and up 21% from $1.1 trillion in 2005
-- 28 deals included AUM of over $10 billion, up 22% from 23 deals in
2006, and up 115% from 13 deals in 2005
-- Deals involving alternative managers reached 69, up 23% from 56 deals
in 2006, and up 82% from 38 deals in 2005
-- Geographically, the US, Asia and Europe all witnessed increased
activity over 2007
Securities Firms
-- Dollar value of M&A deals reached $135 billion, up 147% from $54
billion in 2006, and up 396% from $27 billion in 2005
-- The surge was concentrated in investment banks (93 deals, up 90%),
electronic trading & exchanges (101 deals, up 77%) and diversified
securities firms (43 deals, up 187%)
-- Geographically, all regions saw record growth: Asia (133 deals), Europe
(111 deals) and North America (117 deals)
Private Equity
-- Private equity firms invested $69 billion in 122 financial services
firms in 2007, compared to 151 transactions valued at $38 billion in
2006. Volume in 2005 was 140 transactions worth $50 billion
-- The leading financial sectors for investment were:
-- Financial technology 38 deals $ 33.0 billion
-- Insurance 32 deals $ 19.0 billion
-- Asset management 17 deals $ 8.8 billion
-- Banks & brokers 20 deals $ 6.3 billion
-- Specialty finance 15 deals $ 1.5 billion
About Freeman & Co., LLC
Founded in 1991, Freeman & Co. LLC is a boutique M&A advisory and
strategic management consulting firm focused exclusively on the financial
services industry with offices in New York, London and Paris. The company's
M&A services include mergers and acquisitions advice, capital raising,
fairness opinions, restructuring advice and private company valuations.
Strategic management consulting assignments are customized to client needs and
have covered a wide array of projects. Additionally, Freeman & Co. developed a
proprietary algorithm and methodology for benchmarking the competitive
position of capital markets businesses, which has become the industry standard
used by major investment banks. For more information, see www.freeman-co.com.
(1) Based on the Freeman & Co. FIG PE universe of 91 firms
SOURCE Freeman & Co., LLC
Steve Rose of Hullin Metz & Co, +1-212-752-1044, steve@hmcllc.com, or Howard
Lee of HeadLand Consultancy, +44 0 207 367 5225,
hlee@headlandconsultancy.co.uk, both for Freeman & Co., LLC
