Title

A Future Development: Selling the Advisory Business

Document Type

Article

Publication Date

3-2004

Publisher

LegalWorks

Language

en-US

Abstract

In light of the recent scandals in the mutual fund area, advisers that experience loss of investors' confidence might consider selling their businesses. Other advisers (and more recently, banks) might wish to buy these businesses and expand their enterprises. That would allow them to augment and consolidate the assets of funds with similar investment objectives, utilize additional talent, and enrich their stock of technological tools. Sales of advisory businesses have occurred in the past, but not very often. The issues that these sales involved concerned mainly the fate of the advisory contracts with the funds. In today's environment, and especially if investors' disaffection rises, there might be more sales of advisory businesses, and those transactions might involve new issues. The acquisition of any business is complex. Acquiring a business that advises mutual funds adds dimensions of complexity. This article outlines two issues- one new and one old-that might arise when advisers wish to merge or acquire each other. The discussion focuses on the business of advising mutual funds, even though an adviser also may offer services to individual and institutional clients or operate other financial services such as banking, brokerage, and insurance.

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