Key Highlights
This report has a long list of interesting facts to share:

Evolution of Financial Services Industry Mergers & Acquisitions
This section reviews the financial services industry mergers & acquisitions evolution. This section highlights the market background, market growth, key issues, acquisitions models, and leading financial services company acquirers:

• Financial services industry mergers & acquisitions have gone through three phases, including its regulation, acquisition, and Glass Steagall repeal phases
  
• Almost half of retail banks failed in the 1929 stock market collapse
  
• There are almost 9,500 mergers & acquisitions each year, an increase of over 45% since 2003
  
• Amazingly there are over 800 financial service industry mergers & acquisitions each year, with 996 in 2007
  
• The financial services industry mergers & acquisitions account for only one-tenth of all mergers & acquisitions
  
• Financial services industry mergers & acquisitions valuations have been stagnant, decreasing to $134 billion in 2007 from $200 billion in 2006
  
• The financial services industry mergers & acquisitions valuations account for one-tenth of all mergers & acquisitions, decreasing 15% since 2003
  
• Interesting, mergers & acquisitions average valuations have increased almost 100% between 2002 and 2005, dropping to $121 million in 2006
  
• Financial services mergers & acquisitions average valuations increased over 30% between 2003 and 2006, but dropped to $135 million in 2007
  
• Diversification now accounts for almost half of all transactions
  
• There are a number of financial services industry mergers & acquisitions key issues, including headquarters location, management retention, blending cultures, revenue synergies, and cost synergies
  
• Retail bank consolidation during the 1990s significantly reduced the number of retail banks to 7,426
  
• Many countries still have only 6 or 8 retail banks
  
• Retail bank acquisitions of other retail banks peaked in 1998, declining in 1999 – 2002, and have been rising again since to 425 in 2007
  
• The valuation of retail bank acquisitions increased to its high of $180 billion in 2004, but decreased to $61 billion in 2007
  
• The average retail bank acquiring other retail banks valuation per deal have decreased to $144 million, with 2004 increasing to almost $700 million per deal
  
• Only one-third of retail bank acquisitions will succeed in creating value
  
• Over one-quarter of retail banks will achieve cost savings
  
• Retail banks valuations of asset manager’s acquisitions have also been random, with 2006 hitting its high at over $2 billion and then dropping to $265 million in 2007.
  
• Retail banks acquisitions of other asset manager’s average valuations have been random, with average valuations hitting its high in 2006 at $199 million and then dropping to $12 million in 2007
  
• Full-service brokerage firms’ acquisitions of asset managers have decreased from 15 in 2000 to 7 in 2004. Specifically, there have been 15, 13, 11, 11, and 7 deals in 2000, 2001, 2002, 2003, and 2004
  
• Insurance companies had increased to a high of almost 400 acquisitions, but slowed down between 1996 and 2003 to only 125 acquisitions
  
• The value of insurance industry acquisition has stagnated near $20 billion, hitting its high in 1998 at $165 billion
  
• Insurance companies average valuations have been decreasing every other year beginning in 2001 at $181 billion and dropping to $68 billion
  
• The number of insurance companies acquiring asset managers have been relatively low, barely breaking 10 acquisitions a year
  
• Insurance companies acquisitions valuations have dropped to $153 million from its high in 2005 at $1.7 billion
  
• Insurance companies acquisitions of asset managers average valuations have dropped to $19 million in 2007 from its high in 2005 at $425 million
  
• There are over 600 asset managers
  
• The number of firms on the block slowed after 1996 but about seventy asset manager deals take place each year, topping at 141 deals in 2006
  
• The value of asset manager transactions has declined since 2000. Specifically, the total value of asset manager transactions in 2000 was $13.9 billion
  
• Asset managers acquisitions of other asset managers average valuations have dropped to $39 million in 2003 from its high in 2000 at $195 million
  
• The Bank of New York Mellon Corporation and Wachovia Corporation have been the most prolific acquirers, each acquiring over 53 firms
  
• However, Citigroup leads in acquisition valuation, having spent over $200 billion, with Bank of America Corporation trailing $100 billion behind
  

Future Predictions for Financial Services Industry Mergers & Acquisitions
This section reviews future predictions for institutional mergers & acquisitions:

• Mergers & acquisitions will increase to 9,750 by 2013
  
• Mergers & acquisitions valuations will decrease to $1,050 billion as larger firms take advantage of purchasing smaller firms at a discount
  
• Financial services company mergers & acquisitions will slowly increase and eventually level off to 1,045 by 2013
  
• Financial services company mergers & acquisitions valuations will decrease as large firms purchase smaller niche companies at a discount
  
• Specifically, the average valuations will go up as although there will not be large deals such as Legg Mason & Citigroup and Merrill Lynch & Black Rock, the volume of deals will increase
  
• Cross industry diversification will likely continue; the collapse of Glass Steagall will only increase this trend
  
• Some hypothesize that other full-service brokerage firms will continue the Citigroup & Merrill Lynch trend of selling their asset management business
  
• Financial services firms, such as Morgan Stanley, Wachovia Corporation, and UBS could be possible candidates in reverse diversifying
  
• And it appears Franklin Resources and T. Rowe Price are interested buyers
  
• Foreign financial institutions may be the most frequent acquirers in the next four years as the US dollar is weak and hence firms are selling at a discount
  
• Credit Suisse Group and HSBC are remaking themselves to look more like Citigroup
  
• The ultimate winners will have high market caps (large companies) and high P/E ratios (strong valuations)

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Tiburon Strategic Advisors