Buyouts squared

Although the hubris has died down a bit, some of the recently listed private equity/hedge fund companies could be where the next round of M&A action kicks off. Setting aside some fairly atrocious investment decisions in recent times (and worse to come), there is a case for shaking up some of these entities.

Fundamentally, is there any economic value in (say) keeping an asset management business and a corporate finance advisory business under the same umbrella? Even if you ignore the governance issues that generates, wouldn't the incentives (and behaviours) work better with two separate entities?

Take Blackstone - I'm intrigued that no one has considered the idea of spinning off their corporate finance division and merging it with another M&A franchise.

Having said that, this is not as pressing as clunky insurers holding asset management firms in their structure. Of course, they like the annual management fees those franchises generate, but you end up with double-barrelled mediocrity: lousy underwriting and second-rate fund managers.