Momentum continued in the RIA mergers and acquisitions space with the industry carrying out 33 transactions in the first quarter of 2016, a slight dip from the record 37 deals in Q1 2015, according to just-released research by DeVoe & Co.
Large RIAs managing assets between $1 billion and $5 billion sold in “record numbers” during Q1 2016, comprising 21% of the transactions year to date, nearly double the average 11% of total transactions this group performs in an entire year, the research says.
DeVoe notes that these “highly prized firms” are sought after by banks, consolidators, “mega-RIAs” and, in some cases, private equity.
RIA M&A activity continues to be driven by “high interest from a wide breadth of well-financed acquirers, the aging demographics of RIA owners, and the potential strategic power of combining RIAs,” DeVoe says. “Over time, the industry’s lack of succession planning will likely become a leading driver for RIA sales, as a growing number of retiring principals are unable to sell their equity internally.”
The average assets under management of established RIA sellers exceeded $1 billion, the survey notes, continuing the “upward trajectory.” Meanwhile, banks were active acquirers, maintaining the momentum of re-engaging in RIAs as a growth/cross-sale strategy.
“The surge in RIA M&A activity that began two years ago continued its momentum in the first quarter of 2016,” said David DeVoe, managing partner. “This was one of the strongest quarters of M&A activity that the industry has experienced, which indicates an increased likelihood of continued high transaction volume.”