Morgan Stanley bargaining from strength?

After losing out on BlackRock to Merrill Lynch, Morgan Stanley is still apparently in the hunt to acquire a big asset manager. Its revived talks with Front Point Partners, which has nearly $6 billion in assets under management, suggest that Morgan is still aiming for a major alternative investments presence. The initial talks broke apart over valuation. You have to wonder if hedge fund assets will command less of a premium right now, given the performance problems and other industry-wide clouds. Obviously, multiples will be determined by individual targets. But you have to think that the potential acquirer has a bit of leverage right now.  Front Point is a bit down on its luck, after a big manager left last year, taking a large chunk of assets with him.

For more on the possible deal:
- Here's a brief from BankNet 360