奥纬咨询-私人资本推动更大更好的并购交易 The race for scale in private markets

CAPITALCURRENTS

Theraceforscaleinprivatemarkets

CapitalCurrentsis

across-industryseriesfocusedondistillingthekeytrendsinM&Aandidentifyinghowmanagementteams

cancapturevalue.

©OliverWyman2

©OliverWyman3

Privatemarketsarebecomingoneofthemostactiveareasfordealmakingacrossasset

management.Whiletraditionalassetclassescontinuetofacefeepressureandslowergrowth,privatemarketsassetsundermanagement(AuM)areexpectedtogrowatabout12%per

annumoverthenextfiveyears,comparedwithabout8%forliquidassetclasses,reinforcingthestrategicimportanceofprivatemarketsfranchisesforassetmanagers.

Exhibit1:Marketremainsfragmented:numberofGeneralPartners(GPs)bystrategyandAuM

2025

Privateequity

$16.3TN17.7K

0.3%

1.4%

1.3%

97%

20%

21%

8%

51%

AuMNumber

ofGPs

Privatecredit

$3.8TN2.0K

1%7%

5%

87%

23%

28%

7%

42%

AuMNumber

ofGPs

Realestate

$4.9TN4.8K

1%2%2%

95%

25%

17%

10%

48%

AuMNumber

ofGPs

Infrastructure

$3.4TN1.1K

2%9%

6%

83%

37%

21%

7%

35%

AuMNumber

ofGPs

<$5BN$5-10BN$10-50BN>$50BN

Naturalcapital

0.5K

2%5%

3%

90%

NumberofGPs

$0.6TN

16%

21%

9%

53%

AuM

Source:eVestment,Preqin,OliverWymananalysis

©OliverWyman4

Againstthisbackdrop,privatemarketsareenteringanewphaseofconsolidation.Asscale,

multi-assetcapabilities,andunderwritingsophisticationbecomeincreasinglydecisive,

competitiveadvantagesareconcentratingamongasmallergroupoflarge,integrated

platforms.Yet,despiterapidgrowth,themarketremainshighlyfragmented,withmanyfirmsstilloperatingassingle-strategyGPs.Asassetmanagersseektoclosecapabilitygapsand

strengthenfundraisingrelevance,M&Aisemergingasoneofthefastestpathtobuildbroaderandmoreresilientprivatemarketsfranchises.Privatemarketstransactionvaluegrewatover45%perannumbetween2023and2025,andweexpectthisconsolidationwavetocontinue.

Exhibit2:PrivatemarketsM&Atransactionsvalue

$BN,2023-2025

27.2

22.0

13.0

+45%p.a.

202320242025

Source:S&PCapitalIQ,OliverWymananalysis

Privatemarketstransactionvaluegrewatover45%perannumbetween2023and2025,andweexpectthisconsolidationwavetocontinue.

©OliverWyman5

Whyconsolidationisaccelerating

Competitiveadvantagesinprivatemarketsareincreasinglyconcentratingamonglarger,

multi-capabilityplatforms.Asscale,productbreadth,andunderwritingcapabilitiesbecomemoreimportantdifferentiators,manyassetmanagersareturningtoM&Atoclosecapabilitygapsandstrengthentheircompetitivepositioning.

Scale

Asfundraisingconcentratesandcompetitionintensifies,sizeisshiftingfromanadvantage

toaprerequisite,makingscalethemostimmediatecatalystforconsolidation.Scaledmanagers

withmorethan$10billioninAuMhaveincreasedtheirshareofglobalfundraisingfrom42%between2000and2005toover54%overthelastfiveyears,reflectingamarketthatisrewardingplatformdepthandinstitutionalization.

Largerfirmsbenefitfromstructuralsourcingadvantagesincludingwidernetworks,brand-drivenproprietaryaccess,andparalleloriginationacrosssectorsandgeographies.Theyalsoretaintalentmoreeffectively.Scalealsoenablesinstitutional-gradecapabilitiesacrossrisk,compliance,reporting,data,andportfoliooperations;capabilitiesthatincreasinglymattertoLimitedPartners(LPs).

Exhibit3:Economiesofscale:FundraisingconcentrationattopGPs

%oftotalcapitalraisedbyGPs>$10BNinAuM

46%

+12%

54%

58%

42%

55%

45%

2000-20052010-20152020-2025

GPswith>$10BNinAuMGPswith<$10BNinAuM

Source:Preqin;OliverWymananalysis

©OliverWyman6

Scope

OnceGPsreachmeaningfulsize,theabilitytooffermorestrategies,structures,andsolutionsacrossprivatemarketsbecomescritical.Since2005,thetop20largestGPshavemorethan

sextupledtheaveragenumberofactiveproducts.Theyhaveexpandedbeyondflagshipfundsintosuitesspanningprivateequityandprivatedebtandextendingacrosstherisk-return

spectrum,fromseniorandmezzaninecredittohybridandstructuredequity.

Thesemulti-strategyplatformsallowmanagerstomeetsponsorsandborrowerswhereneedsaremostacute,placingtherightcapitalattherightpointinthecapitalstructureandshiftingunderwritingpostureasmarketconditionschange.OntheLPside,broaderproductsets

supportmorebespoke,scalablesolutionsdeliveredthroughasingleoperatingandreportingbackbonethatdeepensrelationshipsandincreasesshareofwallet.

Exhibit4:Economiesofscope:GPsbuildingnewproductstogainmarketshare

Averagenumberofactiveproductsofferedby20largestGPs1

6

3

200520152025

6x

19

1.Activeproductisdefinedasstrategieswith>$100millionofcapitalwhereanewfundhasbeenraisedinthepastfiveyears.TopGPsreferstotop20largestprivatemarketassetmanagers,byyear.

Source:Preqin,OliverWymananalysis

Since2005,thetop20largestGPshavemorethansextupledtheaveragenumberofactiveproducts.

©OliverWyman7

Underwriting

Expandingacrossstrategiesonlycreatesdurablevalueiftheplatformcanunderwrite

consistentlythroughthecycle,particularlywhenliquidityistighterandoutcomesdiverge.

UnderwritingisthereforereturningtothecenterofLPandlenderdiligenceascreditconditionstighteninpocketsofthemarketandalargerefinancingwallapproachesoverthenexttwo

tothreeyears.

Intoday’smoreselectiveenvironment,performancedependsincreasinglyonentrydiscipline,downsideprotection,andtestingcash-flowresilienceunderhigher-for-longerratesandslowergrowth.Risingmaturitiesarealsodrivingmorestressedandcomplexcaseswherepreservingvaluerequiresactiveportfoliomanagement,workoutskill,andproventurnaroundcapability,notjustoriginationspeed.Weexpectacontinuedriseofstructuredandhybridequitysolutionsthatsitattheboundaryofprivateequityandprivatedebt.

Scale,scopeandunderwritingcapabilitiesarebecomingincreasinglycentraltohowassetmanagerscompeteinprivatemarkets.Asfirmsseektoclosecapabilitygapsandbuildmoreresilientmulti-strategyplatforms,M&Aisemergingasakeyroutetoacceleratecapability

expansionandstrengthenlong-termcompetitivepositioning.

Weexpectacontinuedriseofstructuredandhybrid

equitysolutionsthatsitattheboundaryofprivateequityandprivatedebt.

©OliverWyman8

Fromcapabilitygapstovaluecreation

Asconsolidationacceleratesacrossprivatemarkets,acquirersareincreasinglyfocusedonhowstrategiccombinationscancreatevalue.Inmosttransactions,theprimarydriversarecenteredon(1)revenuegrowth,(2)marginexpansion,(3)multipleexpansion,(4)GPalpha,akeyconsiderationforGPstakesinvestors,and(5)LPalpha,akeystrategicrationaleforassetowners.

1.Revenuegrowthisoftenthemostimmediateandcontrollabledriverofvalue.

Thisisparticularlytruewheretheacquirercanbringseedingcapacityanddistributionreach.Inpractice,thiscanacceleratethreegrowthpathways:

•Scalingexistingstrategies

•Launchingnewproductsandexpandingintoadjacentsub-assetclasses

•Enteringnewclientsegments

ExamplesincludeBlackRock/GlobalInfrastructurePartners,Schroders/Adveqand

GeneralAtlantic/Actis.

2.Marginexpansioncomesfromscaleandoperatingleverage.

Transactionscancreatecostsynergiesbyremovingduplicatedinfrastructure,consolidatingvendorspendandspreadingfixedcostsacrossalargerassetbase.Examplesinclude

Brookfield/Oaktree.Themostcommonareasforsynergiesinclude:

•Technologyplatformsandmarketdata

•Fundadministrationandexternalvendors

•Finance,compliance,riskandothersupportfunctions

3.Multipleexpansionoftenfunctionsasanupsideratherthanaguaranteedoutcome.

Ittypicallymaterializeswhenatransactionstrengthenstheplatformnarrativethrough:

•Improvingdiversificationacrossstrategies

•Increasingscaleandearningsresilience

•Enhancingdistributionbreadth

Thesefactorscanimprovehowinvestorsvaluetheplatformovertime.PastexamplesofliquidassetmanagersexpandingintoilliquidworldthroughM&Aunderscorehowchallengingitcanbetotranslatethatstrategicpromiseintosustainedvaluationuplift.

©OliverWyman9

4.GP‑alphaaddsasecondearningsenginebeyondmanagementfees.

Itdoessobygivingtheacquirerexposuretocarriedinterestandperformancefees.

Well-capitalizedandinstitutionalizedplatformsareoftenbetterpositionedto:

•Sustainfundraisingmomentumandsupportfuturefundlaunches

•Increasecarryandperformancefeepotential

•FundGPcommitments,strategichiresandplatformexpansion

ThisGPalphaisacorerationalebehindGPstakesstrategiespursuedbyinvestorssuchasBlueOwl,PetershillorWafra.

5.LP‑alphareflectsstrongerportfoliooutcomesforassetowners.

Itcanbeadecisiverationaleinasset-owner-ledtransactionswherevalueismeasuredas

improvedportfoliooutcomes,notjustGPearnings.Examplesincludeinsurer-ledtransactionssuchasNuveen/Arcmont,andGenerali/Conningandpension-ledtransactionssuchas

Nest/IFM.Strategicadvantagesthatgobeyonddirectearningscontributioncaninclude:

•Improvedaccesstooversubscribedopportunities

•Moretailoredinvestmentstructuresandmandates

•Betteralignmentbetweeninvestmentsandportfolioneeds

Takentogether,thesevalueleversexplainwhystrategiccombinationsinprivatemarketsareincreasinglyfocusedonbuildingbroader,morescalableandmoreresilientplatforms.

Exhibit5:Valuecreationdrivers

Illustrativeanalysis

5

4

3

ExitEVGP/LP

Alpha

2

1

Multipleexpansion

Marginexpansion

Revenuegrowth

EntryEV

FinalEV

1revenuegrowth2marginexpansion3multipleexpansion4GP_alpha5LP_alphaSource:OliverWymananalysis

©OliverWyman10

HowtoexecuteM&A

successfullyinprivatemarkets

M&Ainassetmanagementisinherentlyhardtoexecutewell.Onlyaroundhalfoftransactionsdeliverameasurableimprovementincost-incomeratio(CIR).Giventheseodds,managementteamsshouldapproachM&Aasanend-to-endprogram,anchoredinstrategicclarityand

rigorouspartnerfitfromdayone.

Definethestrategicrationaleandalignthestory.Startwithaclear“whynow”and“whyus”groundedinasmallsetofvalueleversincludingdistribution,capabilities,operatingleverage

andresiliencethroughthecycle.Buildtwofullyalignednarratives.Thefirstoneshouldbe

aconcise,data-led,decision-readycaseformanagementthatincludesvalueatstake,risks

andrequiredinvestment.Thesecondshouldbeacollaborative,value-proposition-ledmarket

narrativetoengagetargetsthatincludesstrategiclogic,whatsuccesslookslikeforbothparties,andprinciplesforgovernanceandintegration.Ensurethetransactionstructureisaligned

withyourlong-termplan.

Runastructuredtargetscreening.Maptheactionableuniversewithtransparentcriteriaandaprioritizationlogicthatreflectsbothstrategyandfeasibility.Assesseachtarget’smotivationsandtransactionreadinessanddiagnosewhypreviousapproachesmayhavestalledorneverstarted.Includebothconventionalscreensandoutside-the-boxoptionssuchaslift-outsand

strategicminoritystakes.

Executedeepdiligencebeyondlegalandtax.Testthreeareasindepth:commercial

attractiveness,investment-enginedurabilityandtalentandculture.Commercialdiligenceshouldcoverpositioning,marketdemand,fundraisingmomentumandpipeline.Investmentdiligenceshouldassesstrack-recordattribution,repeatability,riskmanagementandscalability.Talentdiligenceshouldfocusonkey-personrisk,incentivesandcarryeconomics,leadershipdepth,anddecisionrights.

Plantheendgameearly.Pressure-testoperatingmodelscenarios;quantifyrealisticsynergieswithtiming,cost-to-achieve,anddependencies;andtranslatethepreferredoptionintoavalidatedorganizationandoperatingmodel,avoidingintegrationbyassumption.

©OliverWyman11

Ultimately,thesuccessofM&Ainprivatemarketsdepends

onwhetherfirmscanexpand

capabilitiesandscaleplatformswhileprotectingtheinvestmentenginethatunderpinslong-termfundraisingandperformance.

OliverWyman,AMarshbusiness

OliverWyman,aMarsh(NYSE:MRSH)business,isamanagementconsultingfirmdrivenbydeepindustryinsight,

boldinnovation,andacollaborativeapproachthatcutsthroughcomplexitytohelporganizationsnavigatetheirmostdefiningtransformativemoments.Marshisagloballeaderinrisk,reinsuranceandcapital,peopleandinvestments,andmanagementconsulting,advisingclientsin130countries.Withannualrevenueof$27billionandmorethan

95,000colleagues,Marshhelpsbuildtheconfidencetothrivethrou