Which fund firm could be the next to make a deal? Two Keefe, Bruyette and Woods analysts -- Robert Lee and Larry Hedden -- have made a stab at putting together a short list of possible candidates in a report published Monday morning.

The report titled "Asset Manager M&A -- Bring it On!" contains predictions for M&A activity in the asset management industry, named several firms in a theoretical "who's next" list for transactions and evaluated the validity of some recent M&A speculation.

The pair listed Morgan Stanley Asset Management, Janus, Calamos Investments, Pzena Investment Management and Waddell & Reed as "eventual transaction candidates."

Yet, just making the list does not mean that a deal is imminent. For example, while the marketplace is speculating that a deal for Janus is in the works, the two analysts predict that deal could take some time.

"We believe current JNS management is focused on renewing AUM growth and highly values its independence, nevertheless we think JNS will ultimately reach a crossroads that will require it to either make acquisitions that broaden its product line and distribution platform or look to maximize value in a sale," they wrote.

Meanwhile, Lee and Hedden noted that Franklin Resources, Legg Mason, Affiliated Managers Group and Blackstone have expressed an interested in making acquisitions.

They predicted that "mega-sized" acquisitions, however, will be rare in the future. Asset managers such as AllianceBernstein, Legg Mason and T. Rowe Price have the size to pull off large transactions, but they have what the report calls "limited to zero inclination" towards such deals.

Franklin, the report claims, is among the best positioned to pull off a large-scale purchase and may currently be willing to consider a large consolidating deal but also may be looking to fill in product holes (i.e. overseas asset management) as opposed to simply creating cost savings.

Meanwhile, Bank of New York Mellon was noted for its experience in acquisitions, global business platform and apparent predilection towards diversifying its asset management operations. Thus, the report notes that BNY may be a good candidate to do a large acquisition in the future, but in the near future would only be interested in an all-equity deal due to capital constraints.

In terms of "who's next" for transactions, the report names several that are thought to have "potential for management to consider a transaction over the longer term."

Morgan Stanley Asset Management is noted as a candidate for a Blackrock/Merrill Lynch type deal, but the report also claims that Morgan Stanley would wish to retain control in any such transaction.

Calamos is highlighted as a business that could benefit from being part of a larger distribution platform, and Pzena as one that will eventually need to expand into new strategies and asset classes. Waddell & Reed will need to deepen its fixed income capabilities in order to maintain its long-term independence, according to the analysts.

Finally, KBW floats a couple of transactions that could "make sense" on paper. With regards to the Franklin and Janus combination that has been subject to much media speculation as of late (see TheMFWire, 7/31/09 ), the paper notes that an acquisition of Janus could make strategic sense for Franklin in that it would fill the large-cap growth equity space in Franklin's product line-up. However, it also notes that Janus management is focused on remaining independent.

As for a potential deal between BNY and Federated, the paper notes that it does not see Federated as being for sale. However, it also notes that it could make some sense to BNY, at least on paper. For instance, BNY could benefit from Federated's retail platform and approach to its equities business. The paper notes that they do not think Federated is for sale, and that such a deal may not align with BNY's ambitions to expand its asset management business globally. 

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