Mergers and acquisitions activity shot to a new record in the first quarter of 2021, more than doubling from the lows experienced at last year’s peak of the Covid-19 pandemic, according to a new report.
The first three months of the year saw 76 deals, the highest number during a single quarter in the history of the wealth management industry, Echelon Partners says in a report. The number of deals is 10% higher than the record set during the prior quarter and 117% higher than the second quarter of 2020, which had the lowest activity since 2017, according to the report.
The record-breaking M&A activity was due to strong markets and increased competition from buyers, as well as concerns about what the new administration could do to capital gains taxes, according to the Los Angeles-based firm specializing in RIA M&A transactions.
Meanwhile, average deal size has reached a new record of more than $2.3 billion, which is 29% higher than the record set in 2020 and the first quarter in which the average deal value surpassed $2 billion, Echelon says.
And the amount of assets under management or under advisement to change hands during the first quarter of 2021 set a new record of around $1.5 trillion, according to the report. That was driven by several mega-deals, such as Warburg Pincus’ recapitalization of Edelman Financial Services, which involved $260 billion, Captrust’s acquisition of Cammack Retirement, which represented $154 billion, and Aquiline Capital’s purchase of SageView Advisory Group, which involved $120 billion, Echelon says.
Meanwhile, strategic buyers and consolidators, particularly private equity-backed firms, were behind a little under half of the deals in the first quarter, according to the report. Mercer Advisors, which is majority-owned by Oak Hill Capital, was behind eight acquisitions during the quarter, Echelon says.
The first quarter of 2021 also saw 124 breakaways, a 17% rise over the prior quarter, according to the report.
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