The CEO of $141 billion asset manager Conning wants to buy smaller firms, but cautions that it's 'silly season' for M&A right now
- Woody Bradford, the CEO of $141 billion asset manager Conning, wants to buy a few asset managers with various investment strategies, including real estate debt and quantitative fixed income, he told Business Insider.
- But Bradford isn't jumping into any deals, since he thinks it's "silly season" for M&A, with valuations that favor sellers more than buyers.
- If an opportunity doesn't check all of his boxes, he always remembers a line from a mentor: 'There's always another deal. Don't fall in love with a transaction.'
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From Morgan Stanley to Lazard, asset managers are on the M&A hunt.
One such acquirer - Conning, a $141 billion, Hartford-Connecticut-based manager - is taking its time to fill multiple holes, said CEO Woody Bradford.
He'd like to add three types of businesses to round out Conning's capabilities as a manager for insurance companies and other institutional investors: real estate debt, commercial finance, and quantitative strategies focused on fixed income. But he's in no rush.
"I actually think the market's a little bit deal-happy right now," Bradford told Business Insider in a recent interview. "I think prices are elevated. The terms are very seller-favorable. I think there are people who are making decisions about acquisitions to fill a hole in a PowerPoint presentation and aren't really giving full consideration to market conditions or cultural fit or the industrial logic of a combination."
Bradford took the helm at Conning in 2009 and has doubled the firm's assets under management since then, partially by adding new businesses. In 2016, Conning bought Octagon Credit Investors, and last year purchased Global Evolution, a Danish emerging markets debt manager. The deals don't come quickly, though. Bradford said he took five years to look for the right emerging markets debt opportunity.
"We've spent some time on some businesses that I honestly loved, really loved the people, thought we could help them and they could help us," he said. "But it's felt a little bit like the silly season in M&A for me, and so my own posture has been to back off very dramatically at this point. We're still active, but the red lights are flashing for me."
Last year, asset and wealth management saw 140 deals totaling $14.9 billion, according to a January report from PwC. Deals were up 5% year-on-year, while total volume jumped 72%, on the heels of a few mega-mergers.
All of the asset classes Bradford wants to build out fit with Conning's focus on managing money for insurers, which comprise about 70% of its client base. Insurance companies tend to invest less in stocks and more in fixed income, with an eye toward income generation across asset classes.
"If you looked at insurance companies big to small, you see very large holdings in real estate debt," for larger players, Bradford said. "When you get to smaller insurance companies, it drops off. They haven't been able to find an efficient way to do it. It's been a drag on their performance over time, on the order of 60-80 basis points."
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Regardless of asset class, he's not in a hurry to do a deal. Bradford typically starts evaluating a company by looking for cultural fit, evaluating investment philosophies, client relationships, and staff development, among other areas.
"Usually you can tell after a couple of meetings if it's worth spending time on," he said. "If it just doesn't feel right, one of my favorite lines that I learned from a mentor 20 years ago is, 'there's always another deal. Don't fall in love with a transaction.' You hear people say, 'there's nothing like this; we have to have that one,' but there's always another deal."
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