Wealth-firm M&A dominated a bumper year for money-management buys in 2006. Against a backdrop of rising personal wealth and record deal flow in the global asset-management industry in 2006, Berkshire Capital 's 2007 Investment Management Industry Review says that 2006 was another record-breaking year for wealth-management acquisitions.

Last year saw a record $47.2 billion in broad-category asset-management deals, easily beating the previous one-year record of $36.4 billion set in 2000 and more than double the level in 2005. The number of asset-management deals, 167, also set a new record, and assets under management that switched hands topped $2 trillion for the first time.

Meanwhile, personal-wealth levels are on the rise as well. Berkshire Capital, a New York-based investment bank, sees wealth held by individuals and families with at least $1 million in financial assets -- which totaled about $33 trillion at the end of 2005 -- rising at 6% a year through 2010.

Busy, busy

Schwab's $3.3-billion sale of U.S. Trust for $3.3 billion to Bank of America was the marquis wealth-management transaction of 2006. The acquisition gave Bank of America an entrée to the ultra-wealth market. The average U.S. Trust client "relationship" runs to about $7 million, which is about five times the Bank of America average.

The U.S. Trust transaction was one of 65 such deals, with a total value of $7.2 billion. The average value of each deal was $111 million, which was over twice the value in 2005.

|image1|

In two other big deals from last year, French BNP Paribas acquired 2,000 non-resident Bank of America wealth-management clients, and Banco Santander acquired 6,000 of Bank of America's U.S.-based Latin American clients. In another big deal Mellon Financial -- itself slated to merge with the Bank of New York -- acquired U.S. Trust's $700-million planned-giving services platform.

Meanwhile lehman.com Lehman Brothers bought H.A. Schupf & Co., a New York-based firm with $2.5 billion in assets under management.

Last year saw a jump in private-equity interest in the wealth management sector. New York-based venture firm Summit Partners put $35 million in Focus Financial Partners, a New York-based holding company for fee-only advisories, a move that the Review says "points to the growing interest among private equity players in the wealth sector." Circle Peak Capital, another New York-based private-equity player, recapitalized Wealth Trust, a Nashville-based firm with business model that's roughly similar to Focus Financial's.

The largest European wealth-management deal in 2006 was Deutsche Bank acquisition of Tilney, the U.K.'s fourth-largest independent wealth manager, for around $660 million. Citigroup bought U.K. firm Quilter from Morgan Stanley, elbowing out a small raft of river bidders, according to U.K. press reports. Swiss serial acquirer EFG bought Harris Allday, another U.K. firm.

EFG was busy elsewhere as well, picking up Monaco's Banque Monegasque de Gestion and Bermudan fund-of-hedge-funds manager Capital Management Advisors.

Two Swiss giants conducted major transactions in Brazil last year. UBS acquired Banco Pactual, a private investment bank and asset manager. Credit Suisse bought majority interest in Hedging-Griffo, a private asset manager and securities firm. -FWR

.