Dealmaking among registered investment advisors hit an all-time in 2024 as interest rate cuts and high valuations spurred mergers and acquisitions, according to consultancy DeVoe & Company.
Last year, DeVoe tallied a record 272 transactions, outpacing the 264 deals it counted in 2022, the firm’s prior highest tally since it began tracking in 2017. The record was bolstered, in large part, by a blockbuster October that included 39 deals and a record-setting 81 transactions in the fourth quarter.
Going into the second half of 2024, the consultants were skeptical that deal volume could outpace 2022. But dealmakers began executing as the Federal Reserve started its first rate-cutting campaign since 2020 in September, followed by a second cut in December.
“The Q4 jump exceeded expectations, partly due to acquirers with pent-up demand who were able to act after rate cuts,” David DeVoe, founder and CEO of the firm, said via email.
Meanwhile, on the seller side, valuations remained attractive in 2024 as “post-election market gains buoyed valuation expectations and dilated any openness to exploring potential sales,” the firm wrote.
According to the consultancy, the lower interest rates caused activity among private equity-backed consolidators, often leveraged with interest-rate-sensitive debt.
“Serial buyers accelerated their activity even faster than anticipated,” the firm wrote. “This move suggests consolidator leadership and M&A teams began acting early in anticipation of federal actions, expanding their pipelines and increasing their offers for sellers.”
That thesis was bolstered by the share of private equity-backed buyer activity, which made up 78% of transactions in the quarter. That is in contrast to the 69% share of private equity-backed buyers accounted for in the first three quarters of 2024.
The firm cited private-equity-backed RIAs such as Beacon Pointe, Cerity Partners and Waverly Advisors.
Non-consolidating RIA buyers also remained relatively active despite consolidator competition. They accounted for about 36% of all transactions for the year, or 97 deals, outpacing their 29% share of the dealmaking in 2023.
The “other buyer” category, however, shrank in 2024 compared to the previous year. Dealmakers, including pure private equity buyers, broker/dealers and banks, booked 54 deals, or 20% of all transactions, compared to 24% in 2023.
CEO David DeVoe said the strong deal market is set to continue in 2025, citing drivers including succession planning, client expectations for “scale and comprehensive services,” and high valuations attractive prompting sellers.
“Despite concerns around tariffs, inflation, and interest rates, we’re still seeing deal activity continue to rise,” he said. “While some buyers are taking a cautious, wait-and-see approach, many are moving forward …. Even with some macroeconomic uncertainty, creative deal structures and growth opportunities are keeping the momentum going in the M&A market.”
The firm did warn that buyers and sellers should be aware of headwinds, including potential regulatory changes and post-election moves by the new administration and Congress.
