66 Pages Posted: 2 Aug 2015 Last revised: 12 Oct 2017
Date Written: October 12, 2017
We use mergers in the global asset management industry as a laboratory to study the value of human capital synergies in M&A. We exploit the reliance on human capital and the unique level of data granularity in this industry to implement a micro-level approach. Following a merger, we find heavy portfolio rebalancing away from core investment areas and towards new areas that are associated with significant performance improvements. In combination, this leads to additional value added of about $18 million in the 3-year post-merger period for the average fund. We relate these synergies to improvements in internal labor markets: managerial rotations increase substantially following the merger, and funds that experience managerial changes show the strongest synergies. The matching of human to investment capital also improves, especially in mergers that increase the size and the complementarity of expertise of the internal labor market. This points to a central benefit associated with these mergers: the added flexibility to create value via discretionary increases in the size and quality of internal labor markets.
Keywords: Asset Management Mergers, Human Capital Synergies, Portfolio Choice, Performance.
JEL Classification: G15, G23.
Suggested Citation: Suggested Citation
Luo, Mancy and Manconi, Alberto and Schumacher, David, The Value of Human Capital Synergies in M&A: Evidence from Global Asset Management (October 12, 2017). Available at SSRN: https://ssrn.com/abstract=2638658 or http://dx.doi.org/10.2139/ssrn.2638658