Excerpts from the 4th edition of Madison Capital’s hedge fund industry M&A overview indicate a record 42 hedge fund deals were closed globally in 2015. According to Hedgeweek.com, this growth translates to 10 more deals compared to the 2014 figure. The report also showed that hedge fund industry assets were at an all time high despite depressed performance in the sampled hedge fund strategies of 2015. Another notable development was the emergence of alternative asset management as a critical investment option for attaining higher returns.
The returns are seen as a solution for offsetting the fast rising liabilities. The report also noted that small hedge fund managers were struggling when it comes to attracting new capital; a situation that forced them to operate below their optimal portfolio levels. These challenges have forced many hedge fund managers to buy into the idea of strategic alternatives.The other factors that are causing a change in the way things are run in the hedge fund sector include high operating cost and increased downward pressure on fees.
In spite of the pressures, the senior MD at Madison Street, Karl D’Cunha is optimistic that the deal environment will blossom in 2016. To prepare for this windfall, various deal mechanism are being used to accommodate sellers and buyers. Besides the traditional mergers and acquisitions, transactions are also being structured as PE stakes, incubator deals, revenue-share stakes and PE stakes. Karl expects the highly fragmented hedge fund industry to continue seeing more consolidation, especially in the area of opportunistic partnership so as to bridge the market divide and improve product offering.
Brief About Madison Street Capital
Madison Street Capital is a leading global investment banking group that offers a banquet of services including financial opinions, financial advisory services, mergers and acquisitions and business valuation services. The firm is also engaged in sectors such as private debt placements and capital raising among other specialty services. Madison Street Capital is incorporated in Chicago. Since its establishment in 2011, the parent company and its various divisions have been committed to the basic principle of integrity, leadership, excellence and service delivery.
Because of the level of trust and outstanding services the firm has been providing over the years, many of MSC professionals continue to represent a broad universe of private and public firms and their shareholders in various forums. According to a Madison Street Capital feature on Slideshare.net, MSC professionals specialize in partnering with middle-market companies in various niche markets and industries to attain optimal results. The professional work ethics involve analyzing each client’s needs in order to come up with the best solutions. The solutions are focused on matching buyers and sellers; creating capitalization structures and arranging financing deals.
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