What are the popular methods for the valuation of asset management companies?
If you are asking in terms of valuation ratios, I think the best metric is EV as a % of Funds / Assets Under Management (FUM/AUM). A more detailed analysis would entail forecasting the topline (from management fee as a % of FUMs) and deducting management related costs. The investment considerations would need to incorporate equity requirements for getting the license (if required) and any required investments from the AMC in each individual fund (if required by the regulatory authority). Additionally, you would want to incorporate the infrastructural requirements (office space, equipment, etc) As the for the top line forecasts, this would come from two primary sources: 1. Management fee (% of FUM) ad 2. Sales loads (if the AMC has any open ended funds) The Management fee figure is a further function of the FUM which is dependent on two drivers : 1. Growth in FUM due to price appreciation and 2. Growth in FUM due to sales in units 1. The growth in FUM due to price appreciation is a fact
