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Average RIA Deal Size Slumps in 2017

By Alex Padalka September 11, 2017

While mergers and acquisitions activity within the RIA space remained healthy in the first six months of 2017, the average deal size has fallen by more than $300 million compared to the first half of last year, according to a recent report from Schwab Advisor Services.

Fifty-two RIA deals concluded in the first six months of 2017, which was the same number as during the first half of 2016, according to Schwab. But the average deal was just $1.139 billion in the first half of this year, compared to $1.442 billion in the first six months of 2016. Deals ranged in size from $77 million to $17 billion in the first half of 2017. There were $59 billion in assets under management acquired compared to $75 billion in the first half of last year, Schwab says. Nonetheless, seven deals in the first six months of 2017 were $2 billion or more, according to the report.

RIAs have ramped up their acquisitions activity, making up 43% of the buyers in the first half of 2017 compared to 35% in the same period last year, according to the report.

Strategic acquirers have also boosted their acquisitions, accounting for 35% of all buyers in the first half of this year compared to 31% in the same period last year, Schwab found.

There were no international acquirers in the first six months of 2017 and private equity firms and brokers dropped from around 20% of buyers in the first half of last year to 12% in the first half of 2017. Banks maintained relatively steady activity, accounting for 10% of the buyers.

Schwab’s data focuses on RIAs with more than $50 million and counts advisors in transition joining existing RIAs and getting equity consideration, according to the report. The data is not intended to encompass all deals across all channels, according to Schwab.