THE VALUATION OF ASSET MANAGEMENT FIRMS

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Abstract

After reviewing the main valuation frameworks of asset management firms, we ran empirical research on 50 listed US and European asset management firms in the 2008-2017 period. Our results find that such firms are characterized by a high EBIT and earnings margin, respectively equal, on average, to 28% and 17% of revenues, represented by fees. The average yearly fees are equal to 1.04% of assets under management (AUM) and the average firm value is equal to 3.01%, confirming the values at which these companies are typically acquired on the market. Higher values are found to be significantly positively correlated with a higher earnings margin and a higher level of fees on AUM, confirming the previous findings of Joenväärä and Scherer (2017) on a smaller US sample.

Keywords: Asset Management, Valuation, Assets under Management, Revenues, Multiples

Authors’ individual contribution: Conceptualization – M.B. and F.M.; Methodology - M.B. and F.M.; Writing – M.B.; Investigation – F.M.; Funding – M.B.; Resources - M.B.; Supervision – M.B.

JEL Classification: G14

Received: 24.04.2019
Accepted: 26.07.2019
Published online: 29.07.2019

How to cite this paper: Bigelli, M., & Manuzzi, F. (2019). The valuation of asset management firms. Corporate Ownership & Control, 16(4), 103-110. https://doi.org/10.22495/cocv16i4art9