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 examine the relationship between firm size and fund performance and to study the value of human capital synergies. We document significant changes in managerial turnover, portfolio differentiation, and fund performance in the post-merger period, especially after mergers that increase the size and complementarity of human capital. The re-allocation of human capital following a merger is associated with a better matching of human to investment capital and creates $4.2 million additional value per year per fund. Improvements in internal labor markets appear to be a central benefit of asset management mergers.

Keywords: Asset Management Mergers, Human Capital Synergies, Portfolio Choice, Performance

JEL Classification: G15, G23