Number of RIA Deals Could Reach Triple Digits in 2017: Schwab

There is continued confidence in the independent advisory model, according to Schwab Advisor Services’ Jon Beatty.

Beatty spoke with ThinkAdvisor to discuss the data that Schwab Advisor Services released on independent advisor industry transactions in the first half of 2017.

“We may be on pace to have a first-ever triple-digit number of deals in our study,” Beatty, who leads Schwab Advisor Services’ sales and relationship management team, told ThinkAdvisor. “We’ll see what the second half brings, but we are on a sustained pace of [merger and acquisition] activity in our industry.”

The 2017 transaction volume is keeping pace with the 2016 total of 94 deals. According to Schwab’s data, 52 deals were completed in the first half of 2017 – continuing the momentum in the first half of 2016, in which 52 deals also occurred.

Breaking it down by quarters, 32 transactions occurred in the first quarter of 2017, and 20 occurred in the second quarter.

According to Beatty, billion-dollar deals are helping to drive this continued momentum.

The average deal size in the first half of 2017 was $1.1 billion, compared with $1.4 billion in the first half of 2016. And there were deals in the first half of this year for firms that manage more than $1 billion.

According to Schwab’s data, 13 transactions involved more than $1 billion in assets under management, while seven involved more than $2 billion in AUM.

“I think for a while in our industry we thought the trend would be billion-dollar-plus firms buying up smaller firms,” Beatty told ThinkAdvisor. “We’re learning that M&A is an equal opportunity for all. And we’re seeing large firms come together probably for the purposes of scale and synergies around what it takes to run a large firm.”