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July 31, 2019 at 10:11 AM
The momentum behind RIA mergers and acquisitions only accelerated in the second quarter after a strong first quarter, putting the sector squarely on track for yet another record year, according to the latest Nuveen/DeVoe RIA Deal Book.
After 32 transactions in the first quarter, there were 33 transactions during Q2, up from 18 in Q2 a year ago and higher than the 12-month trailing average of 29, the latest edition of the Deal Book showed.
“With 65 transactions in the first half, there is a clear path toward a new all-time high of annual activity,” the report said, noting activity in the first six months was a “solid 30% higher than transactions in the first half of the last two years — both of which were successive records at 50 and 49, respectively.”
With rankings in the last three quarters among the industry’s strongest four quarters ever, RIA M&A “momentum has moved from a ‘spike’ to a ‘surge’ and is now trending toward a possible ‘new normal’ of heightened activity,” according to the latest Deal Book.
“The industry is experiencing an unprecedented, sustained surge, which seems likely to continue,” Brad Grubb, managing director at DeVoe & Co, said in the report. “High valuations, the interest in gaining scale, and the lack of succession plans will continue to contribute to the sustained pace,” he predicted.
RIA valuations have “broken through to an all-time high,” David DeVoe, the firm’s managing partner, pointed out in a statement. “Despite richer valuations than the previous record in 2008, these valuations are rooted in stronger fundamentals,” he said. In the past few months, valuations have “attained levels I have not seen during the 16 years I’ve focused on RIA M&A,” he said. Buyers in today’s market, meanwhile, are “not necessarily paying unjustified prices,” according to DeVoe & Co.
