Globalization Driving Record M&As: Firms Also Looking to Broaden Product Array.(Mergers and acquisitions )

Mergers and acquisitions (M&As) among investment companies reached a record this year, and the feverish deal making may continue into the new year as the move toward open architecture and globalization drives companies to seek attractive opportunities.

The number of transaction rose this year to 167 as of last month, compared to the previous record of 159 in all of 2004, according to Putnam Lovell NBF Securities of New York.

The amount of assets acquired totaled $1.41 trillion through Nov. 14, exceeding the previous peak of $1.37 trillion established in 2000, Putnam Lovell found.

"Now that we are in a bull market, companies are taking a deep, strategic look at their business," said Ben Phillips, managing director and head of strategic analysis at Putnam Lovell. "Companies are assessing where they want to go and what areas of business they want to concentrate on."

The industry is moving toward open architecture, and that can be driving some of the deals, as it is difficult to rely solely on proprietary products, said Burton J. Greenwald, president of B.J. Greenwald Associates, a fund consulting firm in Philadelphia.

With 77 million Baby Boomers set to retire, firms are bringing an influx of products specifically designed for them to market, and this has been one of the biggest drivers of M&As, Phillips said. Firms need these products to remain competitive, he said.

Additionally, the playing field has widened internationally, and firms have to position themselves globally to remain competitive, experts noted. Foreign companies are also increasingly looking to participate in the U.S. market. For example, Putnam Investments, the investment management unit of Marsh & McLennan, may be sold to Amvescap of the U.K., UniCredito of Italy or Power Corp. of Canada. Similarly, U.S. companies want to expand their business overseas.