Advisory firm merger-and-acquisition activity set a record in the first half with 80 transactions, 7% ahead of the 2019 record of 75 during the same period, according to a report from TD Ameritrade Institutional, released Thursday.
And COVID-19, which burst on the scene in March? A “hiccup” for RIA dealmakers, who announced more transactions than in any six-month period going back two decades, the report said.
Following 33 announced deals in January and February, activity slowed to 29 deals in the March-to-May period, then shot up to 18 in June as securities markets stabilized.
The reported noted that the 29 deals in the middle period equaled the total in the 2018 first quarter, a record-high quarter at the time.
“There’s a growing recognition among buyers that independent advisory firms are an attractive and reliable investment opportunity,” Peter Dorsey, managing director of institutional sales at TD Ameritrade Institutional, said in a statement.
“And others continue to pursue deals to increase the accretive value of their own firms. This is creating a wave of positive deal momentum that far surpasses any hesitancies or obstacles to transacting related to coronavirus.”
Dorsey acknowledged that even as RIA M&A has reached a new level, a downturn is possible, particularly in light of the coronavirus pandemic.
“The record-setting deal-making pace we’re seeing is truly remarkable, particularly given all the social and economic disruption around COVID-19,” he said.
“That said, the virus remains a threat and could seriously impact the advisory industry — and the economy at large. Barring any serious long-term implications from coronavirus, however, we expect the pace of RIA M&A activity continue to accelerate.”
M&A-targeted firms in the first half represented $125 billion in combined assets under management, a record sum for any previous six-month period, the report said. The first quarter of the year also set a record high with $74 billion in combined assets under management.
The 125 firms in RIA deals announced so far in 2020 have a median $438 million in assets under management. This compares with 158 deals with median assets of $386 million in the same 2019 period and 94 deals with median assets of $413 million in the first six months of 2018.