The momentum behind RIA mergers and acquisitions accelerated further in the third quarter after a strong first half of 2019, achieving the biggest quarter the industry has ever seen and keeping the sector squarely on track for yet another record year, according to the latest Nuveen/DeVoe RIA Deal Book.
After 33 transactions in the second quarter, there were 36 transactions during Q3, up from 22 in Q3 a year ago and higher than the 12-month trailing average of 33, the latest edition of the Deal Book showed.
That surge boosted the 2019 transaction count to 101 at the end of Q3, one ahead of all 2018 RIA M&As with one full quarter still go.
“Based on momentum to date, RIA M&A will likely end the year at roughly 140 transactions,” David DeVoe, managing director at DeVoe & Co., told ThinkAdvisor on Monday.
That’s more than the 129 transactions that Scott Slater, vice president of practice management and consulting at Fidelity Clearing & Custody, recently predicted at that firm’s Inside Track conference in New York. Slater explained that the fourth quarter tends to be very active for M&A activity in the RIA space.
There will likely be 35 to 42 transactions in Q4, DeVoe predicted Monday. “The current volume leaves no doubt that 2019 will be the industry’s sixth successive record year of activity,” he said in a statement, adding: “This acceleration of activity is healthy for the industry. Even at 100 to 150 transactions per year, the M&A activity is less than half of what it should be for an industry with over 10,000 firms.”
DeVoe also predicted there’s little that could throw a wrench into his Q4 and 2019 projections now — even a potential recession. “The seeds for the Q4 crop of M&A deals were planted long ago; little will influence that bounty at this point,” he told ThinkAdvisor. “The impact of a stock market decline or other negative events would more likely manifest itself in the activity four to six months out,” he said.
The “unprecedented M&A activity” so far in 2019 was driven by “high valuations, the lure of scale, and a strong stable of thoroughbred acquirers,” according to the Q3 Deal Book.