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US asset managers spent a record amount in 2025 on mergers and acquisitions as industry consolidation accelerated.
The sector reported $38bn worth of transactions last year, more than double the total in 2024, according to market data provider LSEG. The number of deals in 2025 hit 378, the highest annual total since records began in 1980.
The consolidation boom comes as the once fragmented industry steps up efforts to build scale amid thinning margins, rising costs and growing client demands, with interest rate cuts lowering financing costs and encouraging dealmaking.
The trend was evident in a series of high-profile transactions in 2025, including a $7.4bn take-private of Janus Henderson by a group led by activist investor Trian Fund Management, Rithm Capital’s acquisition of private credit firm Crestline Management to expand its alternatives business, and Nomura’s $1.8bn purchase of Macquarie’s US and European public asset management units.
“You’re probably in the middle innings of this particular consolidation phase,” said Ju-Hon Kwek, a New York-based senior partner at McKinsey & Company.
The US asset management industry, particularly mid-sized firms, has in recent years struggled to increase profits, as surging costs have outpaced revenue growth.
Pre-tax operating margins for North American asset managers dropped to 32 per cent in 2023 from 39 per cent two years earlier, reflecting “flat revenue and higher costs”, according to McKinsey. The rise of low-cost passive investment products has weighed on fee income and slowed — or in some cases reversed — fund inflows at active managers, while heavy spending on artificial intelligence has added to cost pressures.
“Everyone is feeling the strain from margin pressure and there has to be a plan for how we get out of that,” said Joshua Zwick, a partner at Oliver Wyman, referring to one of the drivers of the M&A binge. “Most people want to become bigger rather than smaller.”
Asset managers have pursued acquisitions not only to increase scale but also to add new capabilities as clients demand a wider range of services. The growing popularity of investments such as active exchange traded funds and alternative assets has prompted managers with limited offerings in such products to pursue deals to strengthen their presence.
“People who don’t have capabilities in one of those areas tend to go to M&A to build it because it’s harder to grow this stuff organically,” said Marc Nachmann, global head of asset and wealth management at Goldman Sachs.
Goldman Sachs’ Marc Nachmann: ‘You have to spend the time building the case for each [deal]’ © Brendan McDermid/Reuters
He added that Goldman’s two asset management acquisitions during the year — defined-outcome ETF provider Innovator Capital Management and venture capital firm Industry Ventures — would help the bank expand in “some key areas”.
Lower borrowing costs have provided a near-term boost to asset management dealmaking. The three rate cuts by the Federal Reserve in the second half of 2025 have lowered financing costs, allowing firms to make transactions “with a bit greater ease”, said Andre Veissid, global and Americas financial services leader at EY-Parthenon.
Veissid expected the dealmaking boom to carry on in the coming 12 to 18 months as the Fed moves towards further rate cuts and structural pressures on margins and growth continue to play out.
As asset managers race to build scale, the industry is set to see fewer players amid higher barriers to entry. Oliver Wyman has predicted a 20 per cent decline in the number of asset and wealth managers by 2029, driven by more than 1,500 large transactions.
“Winners are taking more market share than ever before,” said Zwick at Oliver Wyman.
It remains a question whether the latest wave of transactions will deliver on their promise, given the mixed record of past asset management acquisitions.
Oliver Wyman’s study shows that fewer than two-fifths of flagship asset management transactions improved cost-income ratios — a crucial performance benchmark — three years after completion. About half of the deals were followed by net fund outflows, while half of private market firms acquired by traditional managers went on to grow more slowly than the market.
Zwick said post-transaction integration remained a challenge in an industry where aligning people and cultures is inherently difficult.
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“The more you try to cut costs, change processes, combine systems, so on so forth, the more you’re disrupting the business,” he said. “The more that you disrupt the business, the more [of a] challenge it is for you to actually deliver on the revenue synergies and the growth opportunities that the merger originally was intended to provide.”
Asset managers are aware of the problem. Goldman’s Nachmann said it was “easy to buy something”, but “hard to make 1+1 equal 3”, adding that the firm’s core asset management strategy would remain focused on organic growth.
“You have to spend the time building the case for each [deal],” he said. “And if you can’t, you’re probably better off not doing it.”