Repeat Buyers Led 2019 M&A Charge in 2019: TD Ameritrade

The surge in RIA mergers and acquisitions in 2019 was led by repeat buyers, who accounted for 59% of the 144 announced deals, TD Ameritrade Institutional said Wednesday.

M&As involving RIAs jumped 60% last year and doubled from 2017, according to the firm’s FA Insight Mergers & Acquisitions Activity: 2019 Year-End Update. The result obliterated prior records after a fast start in the first six months of the year, the company said.

The 144 transactions last year were double the 72 deals announced in 2017, TD Ameritrade said, noting 2018 was the previous record year with 90 transactions. In all, the advisory firms that were merged or acquired last year managed a total of $156 billion in assets, up 66% over 2018 and 23% higher than the prior record of $127 billion set in 2015, it said.

Among the firms completing multiple transactions, seven entered into four or more deals, accounting for 26 of the total transactions, according to the report. Mercer Advisors was the most active, announcing 11 deals last year, TD Ameritrade said, noting that firm’s largest transaction was Jackson Financial Management of Costa Mesa, California, with about $477 million in assets under management.

However, there were a growing number of first-time buyers also and they, too, contributed significantly to the year’s record M&A activity, TD Ameritrade said. Fifty-four companies initiated their first transaction in 2019, equal to the total number of firms that initiated deals in 2018, it noted.

Four of those first-timers completed multiple deals last year: Bluespring Wealth Partners, Crestwood Advisors Group, Emigrant Bank and Integrated Partners, TD Ameritrade pointed out.

“Many factors contributed to the frenzy of announcements: a strong stock market, abundant capital, high firm valuations, an increasing demand for scale, aging firm founders hungry for an exit strategy and multiple options for transacting partners,” the report said.

Although last year’s deals were announced at a “fairly consistent pace throughout” 2019, the second quarter was especially strong, with the 41 deals announced in that quarter a level that recalled annual totals seen 5-10 years ago, it said.

Among the largest deals based on AUM, TA Associates acquired a major equity stake in the $11.8 billion AUM Wealth Enhancement Group from Lightyear Capital, while 1251 Capital Group announced its plan to buy a majority stake in $10.5 billion AUM Ziegler Capital Management, TD Ameritrade noted.

— Check out RIAs Look to 2020, Say ‘Bring It On’ on ThinkAdvisor.