Administration January 12, 2002

Buying Trouble Acquired Fund Firms Lag Benchmarks: Cerulli

December 13, 2001 (PLANSPONSOR.com) - Fund management firms that are M & A targets may initially do better than their local competitors , but still eventually fall short of worldwide benchmarks, a Cerulli Associates study said.

Reported by

Fred Schneyer

Cerulli said mid-sized firms with between $10 billion and $50 billion in assets under management were the most likely to fall short after a merger or acquisition. Ironically, those firms have traditionally been the most sought after merger targets.

One reason for the long-term performance dropoff: Firms did not properly consider the intangible aspects of a deal, like keeping and motivating high-quality staff, Cerulli said in a Thursday press release.

Non-US firms seemed to be better buyers than US peers, regardless of whether US or non-US targets were examined, the firm added.

Cerulli said two-thirds of British M&A target firms grew quicker after a deal than the country’s fund management industry as a whole, but did not ultimately beat global standards.

However, Continental European buyers tended to grow new asset subsidiaries faster than general industry, Cerulli said.

The survey covered more than 300 merger and acquisition deals since 1990 in the US and Britain.