RIA Valuation Insights

November 28, 2016 Practice Management

Buy-Sell Agreements for Investment Management Firms

An Ounce of Prevention is Worth a Pound of Cure

As difficult it is to imagine a valuable car such as the Ferrari 250GT SWB that we feature in this post being forgotten, what we see more commonly are forgotten buy-sell agreements, collecting dust in desk drawers. Unfortunately, these contracts often turn into liabilities, instead of assets, once they are exhumed, as the words on the page frequently commit the signatories to obligations long forgotten. So we encourage our clients to review their buy-sell agreements regularly, and have compiled some of our observations about how to do so in the whitepaper. We hope this will be helpful to you; call us if you have any questions.

November 21, 2016 Current Events Transactions

U.K. Based Henderson Group Acquires Janus Capital for $2.6 Billion

Coming to America

Though probably not as historic as Plymouth landing or even the Eddie Murphy comedy, Henderson’s purchase of Denver RIA Janus Capital last month is a rare sign of confidence in active managers that have been losing ground to passive investors for quite some time. The era of ETFs and indexing has dominated asset flows for quite some time, so this transaction seems to counter the recent trend.

November 14, 2016 Current Events

What Donald Trump’s Presidency Means to the Investment Management Industry

The purpose of this blog is to consider the implications of the election for the investment management industry, which is no easy feat. The Trump campaign was generally heavy on rhetoric and light on policy details. The investment management industry rarely came up, other than when Trump suggested that he would advocate taxing carried interest returns as ordinary income. He never mentioned, for example, the DOL’s Fiduciary Rule, which is set to phase in three months after the inauguration. The clearest indication of what a Trump presidency means to financial services, so far, appears to be its impact on the banking industry.

November 7, 2016 Current Events

3Q16 Call Reports

The Times They are A-Changin’

As we do every quarter, we take a look at some of the earnings commentary of pacemakers in asset management to gain further insight into the challenges and opportunities developing in the industry. Some of the trends this quarter include the Department of Labor’s Fiduciary Rule, passive management favoritism, and industry consolidation.

October 31, 2016 Current Events

What Hillary Clinton’s Presidency Means to the Investment Management Industry

Barring some extraordinary circumstance, in one week Hillary Clinton will be elected the 44th president of the United States. Her election will mean a lot of different things to a lot of different people, but since this blog is called RIA Valuation Insights, we’ll narrow the focus of this outlook on her upcoming term as president to the possible impact on the investment management community.

October 24, 2016 Current Events Transactions

TriState Buys Aberdeen’s Domestic Fixed Income Business

A Pleasant October Surprise

Banks looking to diversify their revenue stream with investment management fee income would be well advised to study TriState Capital’s acquisition-fueled buildout of its RIA, Chartwell. The Pittsburgh depository started with an internal wealth management arm, bought $7.5 billion wealth manager Chartwell Investment Partners in early 2014, picked up the $2.5 billion Killen Group in late 2015, and last week announced the acquisition of a $4.0 billion domestic fixed income platform strategy from Aberdeen Asset Management.

October 17, 2016 Industry Trends

Don’t Call it a Comeback!

Most Classes of Asset Managers Show Signs of Life After Several Quarters of Underperformance

Maybe the recent trend has nothing on Rocky Balboa or Gordon Bombay, but the past few months have been promising for most publicly traded RIAs. Relatively stable market conditions and better than expected earnings are the likely culprits for the group’s “comeback,” which has the overall index up 13% since February.

October 10, 2016 Alternative Asset Managers

Recent Bribery Scandal, Another Blow to Alternative Asset Managers

Just a few days ago, the largest publicly traded hedge fund, Och-Ziff Capital Management Group, agreed to pay $413 million to settle federal charges that it disbursed more than $100 million in bribes to African government officials. Even before this announcement, the hedge fund industry was in quite the slump.

October 3, 2016 Alternative Asset Managers

Non-Traditional Venture Investors are Changing The Rules Of The Game

After a steady build up since the end of the credit crisis, it appears that 2016 is going to be marked as the year when the venture capital industry lost momentum, although not for a lack of investors. The birth rate of new unicorns has slowed considerably since their 2015 baby-boom, even as the VC market remains dominated by tremendous inflows of capital in late-stage companies. Money has continued to pour in as riskier VC investments are still expected to outperform listed alternatives due to volatile public markets, higher multiples, low interest rates, and the less-than-stellar performance of the global economy. The source of new capital has changed, however, as the venture industry saw a marked increase in nontraditional investors – including pension plans, hedge funds and mutual funds.

September 27, 2016 Alternative Asset Managers

Performance Fees are Dead! Long Live Performance Fees!

Earlier this month, Mercer Capital had the pleasure of helping sponsor the Southern Capital Conference, an annual gathering of venture capital and private equity GPs, as well as the LPs who invest with them. If you believe everything you read about this segment of the investment community, you might expect a fair amount of groaning from the General Partners, with private equity managers under pressure to improve performance, negotiate fees, and increase transparency. The reality was very different.