Mergers and hedge-funds are in the news yet again. This time it’s two big players that are involved in the game. Many wonder what will become of the future for these parties, considering how many have ended up going to auction.
Pacific Alternative Asset Management, from Newport Beach, California and KKR Prisma, New York will be discussing combining $20 billion of assets that are discretionary with the other $14 billion, that is under new management during the second quarter of the year. The merger has a few details.
– KKR would retain 39.9% of the stake in the company.
– The new company would be owned by the employees.
– The co-founder and head of the hedge fund business will be named as the CEO.
The scale of the merger is of equal importance. The scale creates a means to make gains and share important resources of the two companies. Distribution costs of the networks can be consolidated in order for each company to profit more. Perhaps hedge funds and consolidation will become the wave of the future for many that are seeking a multi-level investment opportunity, but with hedge funds just getting started for these two, it’s something that only the future can show. Sometimes, even a difference of opinion and some varied way to really approach problems can benefit both companies. Then they can perform this type of merger and still retaining their original real differences. It’s a little like adding some flavor from the two different companies.
Leg Mason has agreed to all of this in order to benefit both parties. This Baltimore based company has made changes that will benefit real estate, exchange traded funds and hedge funds. Additionally, this merger will include a Permal Group subsidiary joining as well, under Permal Group and EnTrust Capital under Gregg Hymowitz. It is an exciting change for the two companies. They are both excited for the change.
These types of mergers can be extremely risky as well. All it takes is one part failing and the whole thing could fall apart. Then it is two companies taking the hit instead of just one. It’s rare, though. Typically, it is very positive improvement for both companies. Merging them, like a good marriage involves compromise and discussion, but in the end it works. What will happen in the future for the two are up to their joint decisions, but it will be better than they would have been separately.