M&As for RIAs Had Record Year in 2010: Schwab Advisor Services

Last year saw 109 deals totaling $156 billion in AUM versus 2009’s 70 deals at $103 billion AUM

Merger and acquisition activity among registered investment advisors saw a record year in 2010, with 109 deals totaling about $156 billion in assets under management, Charles Schwab Advisor Services reported Wednesday.

That was 39 deals more than the 70 deals totaling about $103 billion in AUM made by the RIA industry in 2009, according to Schwab’s industry-wide RIA mergers and acquisitions transaction report. Schwab Advisor Services, which began tracking deal activity in 2003, provides custodial, operational and trading support for more than 6,000 independent RIAs.

A number of significant 2010 deals involved RIAs as buyers, including Aspiriant’s acquisition of Deloitte Investment Advisors and Back Bay Financial Group’s merger with Modera Wealth Management. Big consolidation deals last year were made by HighTower Advisors, United Capital and Focus Financial Partners.

Other highlights of the report showed that:

  • Average transaction size in 2010 equaled $1.4 billion compared with $1.5 billion in 2009
  • RIA firms were the most common buyers, accounting for more than 50% of acquisitions, a trend that has continued since 2007.
  • Of the 109 deals tracked by Schwab in 2010, 58% of deals represented less than $500 million in assets under management, 23% of deals were between $500 million and $2 billion, and 19% of deals were greater than $2 billion.

The higher number of deals happened mainly because advisors and their clients were in better shape in 2010 than they were during the financial crisis of 2009, said David DeVoe (left), Schwab Advisor Services managing director of strategic business development.

“We saw a significant uptick in M&A deal activity among RIAs in 2010, largely due to advisors putting these discussions back on the front burner after spending the bulk of 2009 helping clients navigate the volatile market environment and managing the day-to-day business of their firms,” DeVoe said in a statement.

“Specific drivers of deal activity include advisors’ growing interest and sophistication in M&A and succession planning, continued interest of holding companies and private equity firms in RIAs, as well as advisor principal demographics,” DeVoe added.

Schwab’s Advisor Transition Services offers help to RIAs looking to set goals, evaluate options such as internal succession, external sale, merger or acquisition, and execute a transition plan. The service includes Schwab's Mergers & Acquisitions Listing Service, an online database offered to advisors that custody with Schwab. The database connects advisory firm buyers and sellers and lets advisors maintain anonymity while soliciting interest and collecting information.

Read about how breakaway broker recruitment is slowing at major custodians at AdvisorOne.com.

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