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Industry Spotlight > Mergers and Acquisitions

Numerology: Bright Future for Advisor M&A Activity

By James J. Green

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While merger and acquisitions of RIA firms slowed during the economic downturn, M&A activity among RIA firms is “poised for resurgence, as a new market environment emerges and the pool of potential buyers undergoes dramatic change,” according to a new study published by Pershing Advisor Solutions (PAS) and FA Insight.

In a statement accompanying the study–Real Deals 2009: Definitive Information on Mergers and Acquisitions for Advisors (available for download at pershing.com)–Mark Tibergien, CEO of PAS, argues that “M&A activity appears poised for a rebound. Advisory firm owners are interested in liquidity, serial buyers remain strongly committed to their longer-term acquisition strategies, and the pace of RIA-to-RIA mergers and acquisitions has increased.”

Dan Inveen, principal of FA Insight, which also produced the recent People and Pay study on advisor compensation, said that he suspects that by the second quarter of 2010, “if not sooner,” there will be a pick up in deal-making. “Assuming continued progress in the economy,” he argues, “it’s not unreasonable to expect the level of activity to approach or surpass what we saw in 2007.”

That’s so, Inveen suggests, because advisors will be shifting their focus “from holding on to clients and getting them through the downturn and turn toward working on their businesses.” Moreover, he says, the motivations to do a deal–realizing liquidity, achieving economies of scale, or establishing a broader range of expertise–”remain stronger than ever.”

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