The individual said a major reason for the increase in merger and acquisition has been the increased cost of regulation, while fund manager pay has also risen. The individual said an increase of £1m in a company’s costs tends to take £1m off the stock market value of the company, and this means it has become very difficult for smaller asset management companies to merge.
James Sullivan, the UK managing director of MitonOptimal and shareholder in Miton through his funds, said: "Further M&A is inevitable in our sector. There is a sense of kill or be killed. Regulatory changes and pressure from the passive community have turned up the heat, and size synergies matters more now than it has done in the past.
"Most asset management companies remain cash flow positive, and are paying big dividends, representing the current profitability on the sector. But future earnings appear less predictable, which is why now is the time to buddy up.
"I think it’s good deal for both parties, however Miton Group have sold out cheaply, and Premier appear to have got themselves a good deal. The shares reacted positively but remain one of the lower rated companies in their sector, not forgetting the cash pile Miton have on their balance sheet."
MitonOptimal is an unrelated company to Miton.
Fenchurch Advisory Partners advised Premier on the deal, while Spencer House was the lead adviser for Miton.
david.thorpe@ft.com
