Madison Street Capital, LLC has released its yearly M&A overview of the hedge fund industry. This report is the 4th edition of the release, which covers every area of the industry including M&A opportunities and transaction activities. The report shows that the volume of transactions in the sector rose by 27 %.
According to this report, which was released by Madison Street Capital in January this year, the number of hedge fund deal closed or announced in the industry increased from 32 in 2014 to 42 in 2015. These transactions represented an increase of 27 % in transaction volume. A number of the deals took place in the fourth quarter of the year. This situation indicates that there shall be a momentum in hedge fund deals in 2016. Analysts are expecting 2016 to record many deals in terms of hedge fund M&A transactions.
From the report, many critical hedge-fund-industry realities can be deduced. First, in 2015, the performance of the industry was below average. However, the industry’s assets are at all-time high. This has enabled institutional investors to look for alternative places to invest with the view to generating more revenues from the hedge funds. These new or alternative areas of investment guarantee investors of receiving high returns. This information was first published at PR.com as indicated in the following link http://www.pr.com/press-release/657365.
From the report, it is also clear that investors are shying away from investing in hedge funds. This scenario is making it hard for hedge fund managers to raise enough capital that will enable them to achieve optimal portfolio capacity level. Reduced number of new clients has resulted in reducing the firms’ returns from its investments. This problem is particularly conspicuous among small hedge fund managers.
Additionally, the industry is suffering from high operational costs. Besides, the competition in the industry has exerted pressure on the hedge fund managers to reduce their fees, thus reducing their revenues. With lower fees and high operation costs, the industry is being compelled to consider strategic alternatives.
Speaking during the event, Madison Street Capital’s Senior Managing Director, Karl D’Cunha, noted that the trend in the industry is creating a good environment for consolidation in the fragmented industry. He also believes that the deal environment in the sector will be stronger in 2016.
About Madison Street Capital
Madison Street Capital, LLC is an investment-banking firm whose headquarters are in Chicago, Illinois. The firm provides financial advisory services to different private and public companies. Its areas of expertise include reorganization, capital restructuring, buyout, mergers and acquisition, private placement and bankruptcy advisory services. Many firms have used the company’s services. These firms include central Iowa Energy LLC, Bond Medial Group Inc and Fiber Science, Inc. This information was originally mentioned on Madison Street Capital’s website as highlighted in the link below http://madisonstreetcapital.org/