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Industry Spotlight > RIAs

RIA M&A Deals Near Last Year’s Record: Schwab Advisor Services

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Despite a weak overall U.S. market for mergers and acquisitions, 2011 is shaping up to be a banner year for M&A in the registered investment advisor industry.

M&A deal activity in the RIA space so far in 2011 totals 44 transactions year to date and $37.7 billion in assets under management compared with 47 transactions and $39.8 billion in AUM at the end of Q3 2010, according to year-to-date figures compiled by Schwab Advisor Services. M&A deals among RIAs saw a record year in 2010, with 109 deals totaling about $156 billion in AUM.

David DeVoe, Schwab Advisor Services“Aside from last year, this is the strongest three consecutive quarters in a year since we started recording this data. Our industry is in the midst of long-term structural changes that are likely to drive an increase in M&A over the long term,” said David DeVoe (left), Schwab Advisor Services managing director of strategic business development.

This strength in RIA M&A deals comes in contrast to a downward slide in the overall U.S. M&A market, according to data provided by Mergermarket, an independent M&A intelligence service owned by the Financial Times Group. Following a strong start to 2011 with $293.6 billion of announced deals in the first quarter, U.S. M&A activity dropped by over 34% in the following two quarters, with Q2 closing at $191.7 billion and Q3 at US$ 193.6 billion, Mergermarket said in an Oct. 3 release.

DeVoe said four trends are contributing to increased RIA M&A:

  1. Demographics of the principals: the average age of RIA business owners is 54, and close to 30% are 60 years old.
  2. The proliferation of consolidators: the growing number of firms that make acquisitions a key part of their business model is giving M&A a boost.
  3. Private equity’s interest in the RIA space: “In 2011, we’ve seen the private equity firms invest more aggressively than they have in the recent past. What’s interesting about this trend is that it underscores the power of the independent model as investors continue to put their money into this part of the industry,” DeVoe said, taking note of three particularly significant private equity deals in the RIA space: The Carlyle Group’s purchase of a minority stake in Avalon Advisors; Warburg Pincus’ investment in the Mutual Fund Store; and Rosemont Investment Partners’ acquisition of a minority stake in Westmount Asset Management.
  4.  Growing sophistication: RIA principals “are becoming much more strategic” in the fundamentals of M&A and how they can use it to achieve their goals, DeVoe said. Looking at the 44 transactions so far in 2011, he said RIAs have been the buyer 43% of the time, as opposed to a bank, a consolidator or a private equity firm.

 “On a relative scale, 2011 is shaping up to be a strong year for mergers and acquisitions among RIAs,” DeVoe said. “This trend underscores the power of independence. The pipelines of consolidators and M&A are relatively strong, but looking forward it will be interesting to see if continued stock market turmoil puts pressure on mergers and acquisitions.”

Schwab’s Advisor Transition Services offers helps RIAs evaluate options such as M&A, internal succession or external sale. 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 The Mixed State of the Advisor Market at


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