In recent years, European asset managers have increasingly turned to consolidation as a strategy to enhance their scale and foster growth. However, a new report by Morningstar suggests that this approach may not be the panacea that firms had anticipated. The report indicates that the challenges of integration often overshadow the potential benefits, diverting leaders and investment staff from their primary goal of generating returns for clients.
According to the report, none of the three major European consolidations in recent years—those involving Amundi, Janus Henderson, and Aberdeen—achieved any "meaningful profitability improvements." In fact, the mergers of Janus Henderson and Aberdeen were followed by significant outflows, raising questions about the effectiveness of consolidation in the industry.
Morningstar’s analysis highlights several hurdles associated with mergers and acquisitions (M&A), including cultural misalignment, leadership complexities, talent exodus, and product rationalization risks. These issues can distract senior leaders from their core responsibilities, according to Monika Calay, director of UK manager research at Morningstar. She stated, "Where firms have pursued M&A, our research shows that this hasn’t consistently delivered significant improvements in investment performance or cost savings for investors." Moreover, the report notes that lower fees, often touted as a benefit of consolidation, did not materialize as expected. It found that a firm’s market positioning, value proposition, and product mix are more influential on fee structures than whether it grows through acquisitions or organically.
Interestingly, 55 of the 99 major European firms surveyed by Morningstar plan to pursue organic growth rather than M&A. Despite this trend, there are still 28 firms that intend to use consolidation as their primary growth method, with an additional 16 firms open to opportunistic acquisitions when the right opportunities arise.
Calay emphasized that the European asset management industry is facing increasing competitive pressure, particularly from large, scale-driven US firms. While high-profile transactions like BNP Paribas’ acquisition of AXA Investment Managers and Natixis Investment Managers’ planned merger with Generali Investments create an impression of accelerated consolidation, Morningstar’s analysis reveals a different reality. "Consolidation in Europe remains limited, with most firms favoring organic growth—expanding product offerings, capabilities, and operational efficiency—over M&A," Calay explained.
Ultimately, Morningstar’s research found "no meaningful differences" between asset managers pursuing organic growth and those engaging in consolidation. Successful firms are likely to focus on innovation, digital transformation, and personalized, tech-driven solutions rather than merely seeking scale. Calay concluded, "Looking ahead, successful asset managers are likely to focus on innovation, digital transformation, and personalized, tech-driven solutions over scale. Selective consolidation may continue, but agile, client-focused growth strategies are likely better positioned to shape the industry’s future."
Meanwhile, on the same day, SRS Acquiom announced the launch of its Mergers & Acquisitions business in the European Union. This expansion aims to provide a comprehensive suite of M&A services, including paying and escrow agent services and professional shareholder representation, to deal parties operating in the region. The company has established a new office in Amsterdam, complementing its existing London office, and is strategically expanding its teams in Europe.
Since its inception in 2007, SRS Acquiom has facilitated M&A transactions through various tech-enabled solutions, including an online M&A payments administration platform that supports over 130 currencies. Caspar Huith, SRS Acquiom’s Managing Director for Europe, remarked, "Amid the increasingly robust and competitive M&A market in Europe, we are pleased to introduce services like professional shareholder representation to provide deal parties within these regions with unparalleled expertise and solution-oriented insights during the post-closing process."
Paul Koenig, CEO and Co-Founder of SRS Acquiom, stated that the expansion into the European market comes at an opportune time, as the company continues to build on its substantial track record of innovations that streamline complex transactions. He emphasized that SRS Acquiom is well-equipped to provide a differentiated and superior client experience across all product categories to meet the growing demand in this active region.
In a related development, global insurance brokerage Arthur J Gallagher has also demonstrated no signs of slowing down its M&A strategy. Announcing its first-quarter results on May 1, 2025, the brokerage revealed it has a $2 billion acquisition war chest for this year alone. This aggressive approach underscores the ongoing interest in M&A within the financial sector, even as challenges persist in achieving profitability through consolidation.
On the broader economic front, M&A activity has seen a significant decline. Recent data from Dealogic shows that the number of M&A contracts announced globally fell to its lowest level in over 20 years in April 2025, largely due to the uncertainty created by U.S. President Donald Trump’s global trade policies. The number of deals signed in the U.S. dropped to just 555, marking the fewest for any month since May 2009. This decline has prompted bankers and CEOs to advise clients to hold off on M&A and initial public offerings until greater clarity emerges regarding U.S. policy.
The global M&A landscape has been particularly impacted by Trump's tariffs, which he announced on April 2, 2025. The tariffs, which initially included a minimum 10% levy on all U.S. imports, have contributed to a significant slowdown in deal-making. As a result, the total value of global M&A activity fell to $243 billion, about 54% below March and 20% below the monthly average over the last two decades.
Despite these challenges, the technology sector has continued to thrive, accounting for almost 40% of the nearly $600 billion in deals signed in the U.S. this year. This resilience highlights the sector's unique position, as its value lies more in intellectual property than in physical goods subject to tariffs.
In conclusion, while the M&A landscape in Europe and beyond is evolving, the challenges associated with consolidation are prompting many firms to reconsider their growth strategies. As asset managers and other industry players navigate this complex environment, a focus on organic growth, innovation, and client-centric solutions may prove to be the most effective path forward.
