After 6-Month Surge, RIA M&A Deals Drop Sharply in Q3: DeVoe

The quarter was the weakest the RIA industry has experienced in nearly three years

RIA merger and acquisition activity dropped to its lowest level in three years, according to the latest edition of the Nuveen/DeVoe RIA M&A Deal Book.

M&A transactions dropped nearly 30% in the third quarter compared with last quarter and the year-ago quarter. Posting just 29 M&A transactions, the period was the weakest the RIA industry has experienced in nearly three years, according to research conducted by DeVoe & Co.

According to the report, the “unexpected decrease” raises the question of whether 2017 will be a record year of activity, which seemed like a “fait accompli” only a few months ago.

“Whether 2017 will be another record year of M&A for the RIA industry remains to be seen,” David DeVoe, managing director at the RIA consulting firm DeVoe & Co., said in a statement. “However, as the underpinnings of overall M&A trend have not changed, we believe that RIA M&A will continue on its broader upward trajectory over the next five plus years.”

Year to date, the industry has experienced 114 transactions versus 108 for the same period in 2016. If the Q3 slowdown is sustained in the final quarter, the year will fall short of the record, according to the report.

The size of the average seller has also dropped. Thus far in 2017, the size of the average seller was a third lower than 2016, regardless of the type of transaction.

So, will 2017 be another record year?

Anecdotally, DeVoe & Co. is working on five transactions that are targeted for a 2017 close – which alone would comprise 25% of the typical established RIA activity for a quarter, boding well for a strong Q4.

However, the report notes that “transactions, much less the timing of transactions, are hard to predict.”

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