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Why RIA M&A Deals Have Plummeted

August 1, 2018

The number of mergers and acquisitions among established firms in the RIA space has plunged more than 50% from the first to the second quarter, according to a report from consulting firm DeVoe & Co. cited by FA magazine.

There were a total of 14 deals among established firms in the second quarter, compared to 32 in the first, which was a record, DeVoe found. But the pace of breakaways heading to other firms has kept up, with a total of 18 in the second quarter, compared to 17 in the first, FA magazine writes.

Overall, the 49 total merger and acquisition deals in the second quarter was one of the lowest levels of activity over the past three and a half years, according to the publication. DeVoe’s study includes companies with between $100 million and $5 billion in assets, FA magazine writes.

“We are in a unique period of extreme turbulence,” said David DeVoe, managing director at DeVoe, according to the publication.

But the average size of the deals rose sharply in the second quarter, to $1.114 billion, up from $905 million in the first quarter, DeVoe found.

The trend is driven by consolidator firms such as Mercer, United Capital and HighTower, and its executives’ recent comments suggest the trend will continue, the study says.

And a lack of succession planning combined with an aging population of RIA owners will further drive mergers and acquisitions, DeVoe tells the magazine.

Of 123 advisors polled by DeVoe, 60% say they expect to buy an RIA in the next two years, the study found.

David DeVoe

High RIA valuations, the large number of buyers, the demographics in the space and the lack of succession planning suggest mergers and acquisitions will continue at a high pace, DeVoe says in its study.

By Alex Padalka
  • To read the FA Magazine article cited in this story, click here.