The Value of Human Capital Synergies in M&A: Evidence from Global Asset Management

Abstract

We use mergers in the global asset management industry to study the value human capital synergies. Following mergers, the average fund rebalances towards new investment areas, creating $18 million in additional value. We relate these synergies to improvements in internal labor markets: synergies are strongest for funds with managerial changes and in mergers that increase the size and complementarity of human capital expertise. This allows for a better matching of human to investment capital and points to a central benefit of 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.