Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Technology > Investment Platforms > Turnkey Asset Management

Advisor Deal Activity Could Drop 20% This Year: Echelon

Your article was successfully shared with the contacts you provided.

In the second quarter, the number of RIA mergers and acquisitions fell 20% from the prior period, hitting 35 total, says Echelon Partners. This weakness and other factors also could bring the total tally of deals in 2020 down 20% from 2019. 

This represents “the lowest quarterly level and sharpest quarter-over-quarter decline since Q2 2016, when only 31 deals were recorded, and volume dropped 43%,” the group said in a report issued Thursday

Projecting out for the next six months, M&A activity could total an estimated 162 deals for the full year, Echelon says: “That would represent a 20% decline from 2019 and would put 2020 on track to be the least active year for deal-making since 2016.”

Some 81 deals have taken place over the first six months of 2020 vs. 101 in the first half of 2019.

Still, the investment firm and consultancy points out, “deal volume started to rebound at the end of Q2 with 15 transactions announced in June,” which means the year-end total might exceed projections.

“The spread of COVID-19, which shocked capital markets and the broader economy in March and April, caused a slowdown in the deal process for many. A number of deals that were expected to be finalized in Q2 were delayed and are now on pace to be completed in Q3,” it added.

Deal Size

The transaction size in the RIA M&A space is at “historically high levels, with 16 firms that have more than $1 billion [in assets] involved in the quarter’s 35 transactions,” according to Echelon.

Overall, the average asset level of the acquired firms to date in 2020 surpassed $1.5 billion, which is “an all-time high,” the group says.

Some of this quarter’s biggest transactions were private equity firm GTCR’s investment, representing a 25% minority stake, in Captrust Financial Advisors. As of March 31, Captrust had roughly 700 employees, some $18 billion in wealth management assets and $390 billion in assets under advisement.

Another large deal announced recently was the merger of Orion Advisor Services and Brinker Capital. The combined entity has some $40 billion in assets under management.


© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.