Madison Street Capital’s Forecast for the 2016 Hedge Fund M&A

Madison Street Capital, a leading international firm in financial investments recently released its report on the hedge fund industry. The 4th edition report details merger and acquisitions (M&A) that occurred last year and the opportunities available. It also shows the Madison Street Capital overview of the hedge fund industry.

In 2015, it reports that a total of 42 hedge fund deals were completed as opposed to 32 in the previous year. Transaction volume for 2015 was up by 27% compared to 2014, this was mainly due to the rise in transactions closed in the last quarter of the year. This indicates that 2016 will have a record number of transactions in the M&A arena.

Although there was a dismal performance for most hedge funds for 2015, industry assets are at a current record high. Investors are gradually increasing allocations to alternate sectors to hedge against the liabilities of current non-performing hedge funds. For hedge fund managers with smaller portfolios, there is a struggle to acquire extra capital. This causes operation costs to skyrocket as pressure increases from investors for them to lower their fees. This has hedge fund managers seeking for alternative investments.

Karl D’Cunha, Senior Managing Director at Madison Street Capital LLC said that the hedge fund industry was very fragmented and consolidation will continue to occur. He said that hedge fund managers will continue seeking partnerships to bring products closer to the people. He noted that the industry will build on the strong 2015 it had to have an even better 2016. To cater for both buyers and sellers, an assortment of mechanisms was being used. He added that not only are the usual M&A structures being carried out, but also others such as PE stakes, revenue-share stakes, and seed deals.

About Madison Street Capital

Madison Street Capital was established in 2005 and is a market investment banking firm. It caters to the middle market businesses providing a variety of solutions. These services include business advisory, valuation, financial restructuring, merger and acquisition advisory services. The services help clients know the true value of their companies, this in turn assists in recognizing the available and future threats and opportunities.

With operations in Africa, Asia, and North America their global nature has helped them become leaders in the financial services market. They assist businesses acquire lending and use their experience to build an exit plan, with expertise in domestic and international corporate governance.

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