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RIA M&A Numbers Suggest it’s a Seller’s Market

May 26, 2016

It’s a good time to be a seller in the RIA space, according to a recent report by market watchers DeVoe & Company and asset manager Nuveen Investments.

DeVoe & Company’s latest edition of its RIA Deal Book, which chronicles M&A activity for RIAs in the first quarter of 2016, says 33 transactions took place, down from a record 37 transactions in first quarter 2015.

Even so, the number of transactions is higher than the 10 and 12 transactions closed in the first quarters of 2014 and 2013 respectively.

The activity continues to be driven by factors that include aging RIA owners and the potential strategic power found when combining RIAs. Going forward, firms without a succession plan are forecast to be a leading motivation behind RIA sales, according to the report.

During the quarter, a record number of large firms (those with $1 billion to $5 billion under management) were sold. This is particularly of interest because this demographic typically accounts for 11% of total transactions, yet year-to-date it has nearly doubled to 21%, according to the report.

RIAs have proven desirable to banks, which DeVoe & Company says are “stepping resolutely into the shallow end of the RIA M&A swimming pool.”

Among bank-led transactions that occurred during the first 90 days of 2016 were those of Mellon Bank and Johnson Financial, which acquired $2 billion-plus firms, and BOK Financial’s purchase of Weaver Wealth Management.

Year-to-date, banks are making acquisitions three times faster than they have before, the DeVoe & Company report adds.

DeVoe & Company says a rise in deals involving $5 billion-plus firms could have something to do with the rise in sales by sellers with $1 billion to $5 billion under management.

“Psychologically, it is easier to move forward with a sale of the company when you observe firms you admire doing the same,” the report says.

By Grace Williams
  • To read the Devoe & Company article cited in this story, click here.