According to research conducted by DeVoe & Company, 44 merger and acquisition transactions were executed among registered investment advisers in the first quarter of 2017, a record high. The report from DeVoe’s RIA Dealbook Q1 2017 noted that M&A transaction volume showed a 29 percent increase over the 34 deals tracked during the same period in 2016. “Advisors are selling and merging to gain the benefits of scale in an increasingly competitive marketplace,” David DeVoe, managing director at DeVoe & Company said in the report. The report also found that:
- RIA owners appear willing to cede some control over their companies in exchange for the benefits of being part of a larger organization, and the increase in RIAs with assets between $100 million to $250 million selling themselves is related to this trend. “These transactions – smaller RIAs selling to larger firms – comprised a full 50% of established RIA sales of during the first quarter, an increase from the historical average of ~30%,” the report noted.
- The trend of advisors leaving wirehouses and joining established RIAs increased in the first quarter.
- Consolidators (firms in the business of acquiring RIAs) absorbed nearly 60 percent of the RIA sellers in the quarter.
- Regional banks are increasingly acquiring RIAs. The report found that regional banks quintupled their typical activity in the first quarter and were likely attracted to the deep client relationships RIAs have with their high-net-worth clients.