The registered investment advisory space reported 61 M&A deals during the second quarter, down from 65 sequentially and up from 57 in the year-ago period, an unusually slow period, according to DeVoe & Company’s latest RIA Deal Book. During the first half of this year, there were 126 transactions in the space, up 5% from a year ago, a sign of a stable yet healthy M&A market.
“For nearly three years, the number of quarterly transactions has consistently hovered around 65. While this volume continues to outpace any quarter prior to 2022, M&A activity in the RIA industry has now remained on a steady plateau for an extended period of time,” the report stated.
A number of new buyers have come into the space recently, with 83 firms announcing deals during the first half of this year, up 26% from the first half of 2023. Kovitz Investment Group and The Colony Group, which are “hub” firms owned by Focus Financial Partners, made the list of the most active acquirers (three or more transactions) for the first time. Other newcomers to the list included AlTi Tiedemann Global and Modern Wealth Management.
“All have taken some form of external capital in support of inorganic growth, illustrating the growing influence of investors on the RIA M&A landscape,” the DeVoe report stated.
Overall, 2024 is on track for a slight increase in M&A from 2023. Market, economic or political developments could impact the growth trajectory of RIA M&A in 2025, the report cautions.
Smaller sellers have represented close to half of all deals done in five of the last seven years, but activity among small RIAs is on the decline as the average deal size is driving upwards.
Year-to-date, mega-firms with over $5 billion in AUM accounted for 15% of all transactions, up from 12% in 2023 and 6% in 2022. Meanwhile, sellers with $100 million to $500 million in assets lost 4% market share to mid-sized firms. Mid-sized sellers ($501 million to $1 billion) were 18% of all deals in the first and second quarters of 2024, up from 13% in the second quarter of 2023 and 14% at the end of 2023.
“Mid-sized sellers are becoming more attractive to buyers, as they often sell at a discount to large and mega-sellers, are relatively easy to integrate, and can provide a moderately sized office in a new market,” the report said.
Beacon Pointe Advisors’ acquisition in June of Joslin Capital Advisors, an RIA with $775 million in client assets, is one example of this.
