Madison Street Capital reports a rise in investment banking.
Madison Street Capital is an international trading company located in Chicago. The firm offers services such as, M&A transactions, asset management, capital restructuring and providing financial opinions and business valuations. Also, the firm works with small and medium size businesses in various field including aviation, financial services, healthcare manufacturing and real estate.
Recently, in the 4th edition of Madison Capital’s hedge fund industry, M&A report released shows that the hedge fund deals is experiencing a boom. Despite some challenges that the financial investment managers are facing. In fact, such as increased operational costs, the managers become innovative and are looking for alternative investment options that can yield higher returns to meet their demands. As a consequence, the directors’ creativity is driving the hedge fund industry to more top trends that are seen in the year 2015 which is expected to continue improving in 2016.
According to the Madison Street Capital, the investment banking sector is supposed to grow. In 2015, a total of 42 hedge fund transactions were closed which was more than 32 deals in 2014. Additionally, AUM measured an increase in transaction volumes by 27% higher than what was recorded in 2014. The rise in the operations in the fourth quarter of 2015 is occasioned by other core drivers in hedge investment momentum and positions 2016 to be a record year for hedge fund M&A transactions.
The report indicates that the finance industry assets are on record higher even when other hedge fund strategies perform dismally. The rise is in spite of the hedge fund stagnated performance, thanks to the decision by institutional investors to increase the allotment to the alternative asset management with the hope of gaining higher returns to meet their rising liabilities. Nevertheless, smaller hedge fund managers are still facing hurdles in attracting new equity, making their performance be below optimal portfolio capacity point. On average, managers are faced with increased operational costs and downward pressure on fees. The impact of the situation is that many hedge fund managers are focusing on strategic alternatives.
With certainty, Karl D’Cunha, a senior Managing Director at Madison Street Capital LLC, reports that the year 2015 provided the best environment for hedge fund industry and will even be better in 2016. The sole reason being that the industry is providing ideal mechanisms for an accommodation of both buyers and sellers. Besides the traditional M&A, financial investment deals are being structured into among other things as seed, incubator transactions, PE stakes, PE bolt-ons and revenue-share stakes. Moreover, the differentiated financial investment industry will be seeing consolidation particularly on the opportunistic partnerships which will fill the gap between distribution and product or service offering firms.