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RIA Deals Broke Record in Q3 on Future Tax Worries: DeVoe

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Concerns about possible changes to the U.S. tax code after the coming election have helped the number of RIA mergers and acquisitions in the third quarter break the all-time quarterly record, DeVoe & Co. said Wednesday.

(Related: RIA Firms Have a Human Capital Problem: DeVoe)

With a week still remaining in the quarter, there were already 36 transactions in Q3, “eclipsing the previous high of 35 transactions set in Q1 2020,” the firm said.

“High valuations, attractive deal structures, and concerns about a potential change in the tax code should [Joe] Biden win have all contributed to the accelerating activity,” it said.

“There is a strong potential that 2020 will be a record year,” David DeVoe, CEO and founder of the firm, told ThinkAdvisor by email, adding: “Our detailed DeVoe RIA Deal Book will come out in the next few weeks.”

The firm reported 132 transactions for 2019. 2020 is now “on track to be the seventh consecutive year of record RIA M&A activity,” it said Wednesday. That comes after a Q2 that was the slowest quarter in almost two years, DeVoe & Co. said in July.

The three top deals of Q3, the firm said, were:

  • Captrust’s acquisition of Plante Moran’s retirement business this month (adding $6.3 billion in assets)
  • Kudu’s investment in Sequoia Financial Group in July ($4.7 billion)
  • CI Financial’s acquisition of Balasa Dinverno Foltz this month ($4.5 billion)

DeVoe & Co. is “currently tracking other transactions that are likely to be announced” this quarter, and “we expect that the volume will exceed 40 announced or signed deals in the quarter” when all is said and done, it projected.

RIA M&A has “surged strongly since the Q1 lull created by COVID,” the firm said, adding: “In March, it was hard to conceive that we’d be reporting a record quarter during 2020.”

Separately, the firm provided an update on its Accelerators program, announced in April, saying the DeVoe Pilot Accelerator is “just finishing with a group of nine advisors. They helped us road test our first Accelerator for Optimizing Your Firm’s Value,” the company said, adding: “They loved it, and we were able to drive their valuations higher while refining the program.”

The firm is “now going live with our ‘ready for prime time’” Accelerator: Optimizing Your Firm’s Value, it said, calling the program a “cost-effective way to get rich, tailored guidance that will help you run a better business and enhance your valuation,” and akin to “a study group on steroids, which includes an intelligently designed and integrated set of tools, webinars, one-on-one coaching and group activities to drive tangible results.”

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