Corporate Valuation, Investment Management

April 4, 2016

Asset Manager Valuations Mixed After a Rocky Q1

From a valuation perspective, it appears that alternative asset managers fared the best in Q1. The group’s median multiple rose 60% in the first three months of the year, besting all other classes of asset managers over the same period.

assetmanager-historical-valuation-q1 Closer inspection reveals a much bleaker quarter for the publicly traded hedge funds and private equity firms in our alternative asset manager index. Despite significant gains in the back half of the quarter, the group lost roughly 5% of its market cap during the first three months of the year. In other words, the E is falling faster than the P/E is rising for most of these businesses. With many names trading at a 40%+ discount to their 52 week high, the market seems to be questioning the long-term viability of many hedge funds and PE firms whose high fees and subpar performance have come under scrutiny in recent years. asset-manager-pricing-q1 On the other end of the spectrum, more traditional, long-only managers appear to have taken some market share from their alternative counterparts over the same period. Investors continue to grow wary of higher fees, especially when performance suffers, so this is no surprise to those who follow the sector. Still, hedge funds are typically better poised to profit from market volatility, which might explain the group’s advancement since its mid-February bottom. asset-manager-sector-q1 Moving forward, this disparity is unlikely to persist if many of these publicly traded alt managers are to remain a going concern. The past few weeks have been promising, but the index as a whole lost roughly half of its market cap from July of last year to February of 2016. An opportunistic investor with a high risk tolerance might see this as a buying opportunity. Others will look skeptically at the sector’s prospects in the era of passive investing.

Continue Reading

Mercer Capital to Sponsor the Association of Trust Organizations 2026 Annual Meeting
Mercer Capital to Sponsor the Association of Trust Organizations 2026 Annual Meeting
Mercer Capital is pleased to sponsor the Association of Trust Organizations’ 2026 Annual Meeting, taking place September 21-23, 2026, at the Grand Hyatt Deer Valley in Park City, Utah. Matt Crow, Brooks Hamner, and Zach Milam will attend on behalf of the firm.The 2026 Annual Meeting is a 1.5-day conference designed exclusively for the trust industry and will feature more than 13 hours of roundtables, panels, and networking. One of the featured sessions is Tuesday afternoon’s Session VI, “What Makes a Trust Company Worth More? Building Value Before the Deal,” which will be moderated by Matt Crow. The panel will explore the factors that drive valuation, how buyers and sellers evaluate opportunities, and what firms can do today to maximize enterprise value.Matt Crow, CFA, ASA, is the CEO of Mercer Capital and leads the firm’s Investment Management Industry team. He works with RIAs, independent trust companies, broker-dealers, and investment consulting firms on valuation matters related to corporate planning and reorganization, transactions, employee stock ownership plans, tax issues, and intangible asset valuations. Matt is also a frequent contributor to Mercer Capital’s RIA Valuation Insights blog.Brooks Hamner, CFA, ASA, is a Senior Vice President and a senior member of Mercer Capital’s Investment Management Industry team. He provides valuation services to RIAs, independent trust companies, asset managers, wealth management firms, broker-dealers, and investment consultants, and he also advises clients buying or selling their business.Zach Milam, CFA, is a Vice President and a senior member of Mercer Capital’s Investment Management Industry team. He has experience in corporate planning and reorganizations, financial reporting, fairness opinions, litigation support, employee stock ownership plans, and estate and gift tax planning and compliance matters.Mercer Capital regularly works with RIAs, independent trust companies, broker-dealers, and other investment management clients on valuation and advisory matters, and the firm looks forward to connecting with attendees in Park City. Visit the conference website to learn more about this year’s Annual Meeting: https://trustorgs.com/annual-meeting/.
The Margin RIA Buyers Actually Underwrite
The Margin RIA Buyers Actually Underwrite

Why the Post-Closing Cost Structure Matters More Than the Historical Margin

RIA buyers often focus less on a seller’s historical margin than on the earnings the business can generate after closing under the buyer’s operating model. Differences in integration strategy, cost structure, and platform capabilities can lead buyers to underwrite materially different margins and values.
RIA Valuation Insights Blog Investment Management
Read Now about The Margin RIA Buyers Actually Underwrite
Does AI Spending Increase an RIA’s Value-or Just Reduce Its EBITDA?
Does AI Spending Increase an RIA’s Value - or Just Reduce Its EBITDA?
AI investment can create value for RIAs by improving capacity, growth, efficiency, and risk management, but the benefits must ultimately translate into stronger cash flow or reduced risk. Recurring AI costs generally remain operating expenses, making measurable adoption and returns critical to valuation.

Cart

Your cart is empty