The trouble two mutual fund firms are having in finding buyers may be a sign that the seller's market is over for money management firms, industry watchers say.

BankAmerica Corp., San Francisco, has been hawking its Robertson Stephens Investment Management unit since June and has talked without success to several firms. Discussions reportedly have been held with John Nuveen & Co., Chicago, and at least one other mutual fund company. Nuveen has declined to comment.

The New York-based Kaufmann Fund, with $6.4 billion of assets under management, has been seeking a buyer since at least March.

Both companies have been hurt by the poor performance of their mutual funds in recent months. Even with that handicap, they would have had no trouble finding buyers a year ago, some say.

"Certainly there has been a psychological shift," said Thomas W. Courtney Jr., president of Courtney Group Inc., a New York-based investment banking firm. "The bloom may be coming off the rose."

Some mergers are still taking place. Late last month Nationwide Financial Services agreed to buy the $12.5 billion-asset fund firm Pilgrim Baxter & Associates for a reported $600 million.

Fund companies are not as profitable as they were even six months ago. As the stock market has soured, asset growth has slowed because of poor returns and redemptions, and that has cut into management fee income.

"Today, buyers are reluctant unless there is a strategic reason for making a deal," said Burton J. Greenwald, a Philadelphia-based mutual fund consultant.

During the bull market, by contrast, money management firms were snapped up left and right, resulting in rich payouts for the firms' owners.

The deals included Mellon Bank's purchase of the Founders Funds for $275 million, Franklin Resources' $610 million deal for the Mutual Shares family of funds, and Fleet Financial's purchase of the Columbia Funds for $600 million.

A firm like Robertson Stephens would have found a buyer quickly a year or 18 months ago because of its $4.4 billion of assets under management- including $2.4 billion in mutual funds-and its name recognition, Mr. Greenwald said. BankAmerica has been asking $150 million for the unit.

The funds' performance, however, has suffered badly-one of its most popular funds, the Contrarian Fund, is down almost 37% through September- and they have been hit by redemptions.

"Robbie Stephens is a great indicator of how the temperature has changed in terms of acquiring mutual fund companies," Mr. Greenwald said, adding that a client of his decided against a deal after looking at the firm's books.

Complicating matters is Robertson Stephens' hedge fund operation, which had $757 million of assets under management as of March 31. The profitable operation may be the most attractive part of the business.

In the wake of the near failure last month of hedge fund giant Long-Term Capital Management, Congress may move to regulate such funds more tightly, and that prospect may be deterring potential buyers, Mr. Courtney said.

A spokesman for BankAmerica referred questions to Robertson Stephens, and a spokeswoman for that business declined to comment.

As for the Kaufmann Fund, it was down nearly 14% through September. Because it is known for investing in small, aggressive companies and buying into initial public stock offerings, some question the liquidity of the company's portfolio, Mr. Greenwald said.

Given such factors, Kaufmann may have too high an asking price, though none has been made public. Calls to Kaufmann for comment were not returned.

Deals may still be made, but only if sellers are willing to lower their prices, Mr. Courtney said.

"The question I have is: How long will it take sellers to adjust to the fact their business is now worth 20% to 50% less than it was a few months ago?" he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.