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Wealth Management M&A Deals Still on Track to Top 200 in 2019: Echelon

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The U.S. wealth management M&A market remained relatively robust in the third quarter “despite continued capital markets uncertainty,” with the 49 completed deals falling just slightly shy of the 52 transactions finalized in the second quarter, according to the Q3 2019 RIA M&A Deal Report released Tuesday by Echelon Partners.

Despite the slight dip from the second quarter, 2019 remains “on track to be another record-breaking year” for U.S. wealth management M&As, with more than 200 deals still projected to be completed, Echelon’s report said.

There was, however, a major difference in deal size between the last two quarters, according to the company.

Midsize firms, with assets under management between $300 million and $1 billion, drove activity during the second quarter despite volatility in capital markets, Echelon reported.

But, in Q3, there was an increase in the number of deals involving firms with over $1 billion in AUM and the average AUM transacted per deal, “reversing” the trend of declining deal size in the first half of this year, Echelon said. Private equity firms and banks were the buyers most interested in larger platforms during Q3, it noted.

There were 17 deals of $1 billion or more in Q3, the largest being Charles Schwab’s acquisition of the brokerage and managed portfolio accounts of USAA’s Investment Management Company and its $90 billion in AUM for the purchase price of $1.8 billion in cash, Echelon noted. That deal was “another indicator of Charles Schwab’s push to expand its identity beyond its historical role as a discount broker,” according to Echelon.

The wealth management industry is now expected to have 59 transactions involving firms with more than $1 billion in AUM for all of 2019, a whopping 84% increase from 2018, according to Echelon. Although most of the industry’s smaller deals continue to be completed by RIAs and consolidators, private equity companies and banks are dominating these large transactions, accounting for almost all of the $20 billion-plus deals and most deals over $1 billion in AUM, Echelon said in the report.

RIAs continued their M&A “spree” in Q3, the report noted. “After experiencing declining market share of M&A transactions since 2016, RIAs are dominating low AUM deal volume so far this year and are now the most active category,” it said, projecting there will be a total of 76 RIA-to-RIA transactions in 2019, representing a 58% increase from 2018.

Meanwhile, after a slow start in 2019 and a record Q2, there were 138 breakaways in Q3, higher than the historical average, but closer to the levels seen in 2017 and 2018, Echelon noted. The largest breakaway of Q3 was Jonathan Williams’ and Kevin Curtis’ departure from Wilmington Trust to join Summit Trail Advisors, the report pointed out.

The number of $1 billion-plus wealth management M&A deals and breakaways is expected to reach 66 this year, a 38% increase from 2018, the report said.


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