A CEO at one of the world’s largest asset managers is downbeat on European M&A while ‘people are frozen’ before Brexit

source
Lazard

  • Kenneth Jacobs CEO of Lazard, one of the world’s largest asset managers, says the UK has been “frozen” by Brexit.
  • The company sees Europe as more of a mixed picture, but suggests that domestic companies are more nervous.
  • “Brexit is putting a lot of things on hold because we’re getting closer to the point of no return,” Jacobs said.

Europe’s economic malaise has had a real impact on investment and deal-making, says the CEO of asset manager Lazard. Brexit in particular, he says, is a key concern.

“From an M&A perspective, Brexit is putting a lot of things on hold because we’re getting closer to the point of no return,” said Kenneth Jacobs, CEO of Lazard, one of the world’s largest asset managers. “People are more frozen as a result of that.”

Brexit has already seen considerable changes to the makeup of the UK’s financial services industry. A number of banks and other institutions are leaving the country even before Britain officially leaves the European Union on March 29.

Besides Brexit, investors have a lot more to fear when it comes to the economic health of the continent. There’s weak manufacturing data, ‘yellow vest’ issues in France, and two of the continent’s four biggest economies, representing a total GDP of more than $5.5 trillion, are on the brink of, or already in, recession.

“Domestic companies in Europe are a little more nervous,” he said.

Multinational businesses which have exposure to US markets are likely to be OK, Jacobs said. However, those with greater exposure to China and emerging markets are “probably more muted.”

M&A has become an increasingly tricky market for active managers which are suffering from heightened regulatory and technology costs, fee reductions, and slower growth. Meanwhile, buyers are trying to gain scale for cost efficiencies, better distribution, and more products.

Lazard’s $215 billion asset-management business hit a record $1.2 billion in revenue last year, according to earnings results released Tuesday.