Hedge Fund M&A 2010
Hedge Fund Consolidation through M&A in 2010
But merger risks at hedge funds are huge, which is why they are seldom attempted. As entrepreneurial businesses, names above doors matter, and talent often walks. As long as returns are good and managers rake in high performance fees, they are loath to give up their independence. Nobody wants to buy weak and underperforming managers.
Expectations that 2008's poor performance would force smaller hedge funds to seek the shelter of bigger owners proved wide of the mark. With no guarantee of hanging on to acquired assets under management, the businesses are very hard to value. For hedge funds, a better strategy may be to hire the talent and seed new funds themselves.
If there is deal activity in 2010, it is likely to involve banks. Credit Suisse is still keen to expand its alternative-investment business, building on existing successful partnerships with hedge funds, according to someone familiar with the situation. Source
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