Pershing Advisor Solutions reported the results of a new study on Wednesday that found M&A activity among firms with more than $500,000 in revenue was flat in 2010 and valuations were lower than in past years. The study, Real Deals 2010: Definitive Information on Mergers and Acquisitions for Advisorsalso finds both the type of transactions and the participants continued to change significantly. However, the firm also notes an "uptrend" in deal activity is expected.
Schwab Advisor Services also released a study the same day that found a total of 23 M&A transactions involving RIAs in the first quarter of 2011, down slightly from the 25 deals reported in Q1 of 2010.The 23 total RIA transactions sold in first quarter 2011 represent approximately $20 billion in total assets under management. Of the 23 transactions, RIA firms were the most dominant acquirer category, accounting for more than 50% of acquisitions, a trend that has continued since 2009. The number of acquisitions by RIAs underscores their growing sophistication and reflects efforts to use M&A as a way to achieve business goals and objectives.
While both surveys show increased mergers and acquisition activity among RIAs, Pershing in particular notes an increase among those RIAs that appeal to those not considered high net worth.
"I've seen a lot of movement, but not a whole lot of motion," say Pershing Advisor Solutions CEO Mark Tibergien (left), when asked about surprises included in the results. "Large RIAs are asking smaller RIAs to dance, but they are not going home with them afterwards, so to speak."
Pershing’s Real Deals 2010, developed with FA Insight, builds on findings from past Pershing Advisor Solutions’ Real Deals studies published in 2006, 2008 and 2009. The report begins with a review of key developments in mergers and acquisitions since the release of the last Real Deals in 2009, and provides insight that is derived from a decade of transaction data compiled specifically for the Real Deals report series. This year, special attention is devoted to the concept of firm value—how it is measured and how owners can better influence and build value within their advisory firms.