Deal activity in the wealth management space continued to break records last year, with 2024 becoming the most active M&A year in industry history, with 336 deals, up 14% from 2023, according to a recent report by Echelon Partners.
Echelon highlighted the top 10 M&A transactions in wealth management by assets transacted in 2024, seven of which involved a private equity buyer. Private equity firms made 50 direct investments last year, up nearly 67% from 2023. Last year saw 259 total private equity deals, including direct and tuck-in acquisitions by portfolio companies, up from 199 in 2023.
This highlights private equity’s increasing dominance in M&A, and Echelon expects this could fuel further M&A and tuck-in acquisitions in the years to come.
“Following periods of significant private equity investment in wealth platforms, tuck-in M&A activity tends to increase (as witnessed in 2021 and 2022),” Echelon stated in its report. “We estimate incremental capital of 3-4x the initial investment via follow on injections of debt and equity capital to fuel these tuck-ins.”
When private equity firms are looking to invest in RIAs, they’re looking for profitability (over $5 million in EBITDA), organic growth of 10% or more, experienced management teams and a deep bench of advisor talent, with limited to no key man risk, Echelon said.
