Business and financial services M&A update: Q2 2020

Financial services trends

• Education and training:¹ With COVID-19 affecting the ability to conduct face-to-face classes, many organizations are increasing technology spend to support more online learning. Specifically, there has been a renewed focus on investments in learning experience platforms (LEP) that offer personalization capabilities and skills management. These systems deliver personalized learning paths, channels, and collections that enable learners to organize, access, and share relevant resources easily and are more advanced than traditional learning management systems (LMS) that focus on scheduling, registration, and tracking of a learner’s activities. As the digital workplace evolves, many organizations are looking to LEPs as a way to aid learner adoption and drive engagement across various stakeholders. Some more established corporate learning vendors are starting to collaborate with new LEP providers to broaden their offerings portfolio.
• Specialty consulting:^2,3 COVID-19 is forcing many businesses to halt projects, or descale them to some degree, reducing revenue and new opportunities for many consultants across the United States. There are some long-term technology projects that are performing relatively well in spite of the disruption, as much of the work can be done remotely. The implementation of digital technologies is needed now more than ever as the world continues to shift into a more virtual environment. Companies can use the slowdown to evaluate their ability to adapt to the ever-changing digital universe. Specialty consulting firms may benefit from guiding the implementation of such digital processes, potentially enabling companies to navigate a post–COVID-19 world more efficiently and effectively.
• Asset management:⁴ Current investors are aging and being replaced by millennials, who often have very different approaches to managing money and building wealth. Low-fee, passive index funds are creating downward pressure on fees for wealth management funds as they compete to retain clients. The cumulative effect of fee pressure, a shift to passive investments, and concentration of success in gathering assets is driving many firms to continue to take bolder actions to grow, operate efficiently, and engage customers. In 2020, many alternative and long-only investment managers alike could cross boundaries and leave their comfort zones by incorporating new trading strategies, products, and technologies.