M

1
MA Activity and Issues in the Asset Management
Industry
2
MA OVERVIEW

• 2008 was a difficult year for the industry
• Silver Lining emerging in 2009
• Deal Volume down in 2009 relative to 2008
• 2009 Value Gap between buyer and seller
• Revenue Share
• Cashless Deals
• Longer Term Earnouts
• New Landscape Distribution is CRITICAL
  element for SUCCESS

3
DEAL STRUCTURE
4
BUYER CONSIDERATIONS

• Financial Opinions
• Rising Public Multiples
• Banks and Insurance Companies are most active
  sellers
• Client-based Longevity
• High Water Mark Issues
• Culture Fit (Personality)
• Fee Pressure by large institutional clients
• Deal Consideration/ Structure (Cashless
  Environment)
• Regulatory and Compliance Issues

5
SELLER CONSIDERATIONS

• Revenue Sharing Arrangements, Sizable
  Multi-year Earnouts, and Cashless Mergers
• Price Disparity
• Buyers Distribution Capabilities
• Change of Control (Operate Autonomously)
• Deal Structure (Earnout)
• Regulatory Issues

6
THINGS TO CONSIDER WHEN VALUING YOUR FIRM

• Methodology
• Management
• Performance and Other Fees
• Current and Projected AUM (Future Value)
• Operating Expenses
• Client Base
• Marketing Team

7
RECENT TRANSACTIONS
8
HOULIHAN SMITH COMPANY
HOULIHAN SMITH COMPANY, INC. (HOULIHAN) is a
nationally recognized valuation and investment
banking firm (Member FINRA, SIPC) based in
Chicago, with offices in New York, Los Angeles,
London, and Toronto. Houlihan provides
comprehensive services to several of the largest
public and private companies. We are recognized
as a global leader in restructuring and financial
opinions. We combine analytical precision with
in-depth industry knowledge to address even the
most sophisticated valuation challenges Our
approach exceeds regulatory compliance
requirements concerning corporate valuation,
financial reporting, tax, and litigation support.
Houlihans valuations are objective,
independent, defensible, and thoroughly
documented in order to meet the heightened
requirements of regulatory agencies, auditors,
and legal bodies.
9
HOULIHAN SMITH COMPANY
Karl DCunha is a Senior Managing Director at
Houlihan Smith and oversees the firms financial
advisory practice. He is head of the firms Hedge
Fund Advisory services group and a team leader of
the firms Technical Standards Committee. Mr.
DCunha has over 13 years experience in the
alternative investments industry, including
working with some of the largest hedge funds
globally on valuation, restructuring and MA
issues. Mr. DCunha has prepared, supervised, and
consulted upon assignments to US and
International hedge funds, fund of funds,
investment advisors, mutual funds and other
entities. Mr. D'Cunha was previously an audit
manager at Ernst Young, LLP and
PricewaterhouseCoopers, LLP with 8 years
experience in the Investment Management industry
group. Mr. D'Cunha holds a B.A. in Finance and
Economics from University of Western Ontario and
a Graduate Diploma in Accounting from McGill
University. Mr. D'Cunha is a Chartered Accountant
and a level III candidate in the Chartered
Financial Analyst program. Mr. DCunha is a
member of the following organizations Canadian
Institute of Chartered Accountants, CFA Society
of Chicago, CFA Institute, Hedge Fund
Association, New York Hedge Fund Roundtable,
Association of Chartered Accountants in the
United States, Association for Financial
Professionals, Appraisal Issues Task Force, and
American MENSA, Ltd.