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February 26, 2016 at 05:42 AM
In 2015, mergers and acquisitions activity in the RIA industry hit an all-time record.
According to the DeVoe & Company RIA Deal Book, which tracks mergers, sales and acquisitions of firms that are registered with the Securities and Exchange Commission as registered investment advisors, there were 123 M&A transactions in the last year.
This is a 37% increase above 2014’s previous record of 90 transactions, and more than double the 58 transactions executed in 2013.
“The continued surge in RIA M&A activity over the last two years is a natural phase of consolidation that most hyper-fragmented industries experience as they mature,” said David DeVoe, managing partner at DeVoe & Co., in the report. “We expect this momentum to continue and potentially accelerate over the next five to seven years.”
Already, according to the report, 2016 is off to a strong start with 10 transactions being executed in January.
The DeVoe RIA Deal Book finds that this year’s M&A increased despite a backdrop of challenging conditions – largely thanks to accelerating activity across all buyer categories, the re-emergence of private equity and banks as acquirers, and the aging demographics of RIA owners.
“Historically, significant stock market declines and sustained periods of market volatility have dampened M&A activity in the RIA space,” the report states. “These circumstances pull advisors away from the negotiation table, as they focus their energy on reassuring clients and monitoring the market.”
The “stock market roller coaster of 2015” didn’t appear to dampen the transaction volume, the report finds.
In addition to an overall spike in M&A activity in the RIA industry, the report finds there was a large spike in “mega-deals.” The report defines a mega deal as a transaction involving sellers with more than $5 billion in AUM.
