There were 228 mergers and acquisitions among U.S. registered investment advisor firms from 2000 to July 2006, with an estimated deal value totaling $1.5 billion, according to a report presented Oct. 23 at the Financial Planning Association annual convention in Nashville.
Philip Palaveev, a senior manager at Moss Adams LLP, Seattle, said his company’s study found an active and growing M&A market for financial advisory practices. The study was sponsored by Pershing Advisor Solutions, a unit of the Bank of New York.
Firms in the study had assets under management of at least $100 million and served individual clients rather than institutions.
The 228 deals covered by the study comprised firms representing 4% of the total population of RIAs fitting the study profile.
New York, Chicago, Florida, Southern California, Washington and Philadelphia were the hottest markets for M&A deals in the industry, Palaveev said.
Firms that advertised themselves as “for sale” received on average up to 15 offers, yet even firms not actively seeking a buyer received up to 5 inquiries from potential suitors during the study period, he said.
In terms of deal size, 24.5% involved total payments of over $50 million, while almost 23% were valued at between $20 million and $50 million.
Banks were the leading buyers, accounting for 50% of transactions, or 17 deals, in 2005 and 43%, or 6 deals, so far this year.