Mergers and acquisitions activity among RIA firms in 2020 set a record for the seventh year in a row, according to a DeVoe & Company report released Thursday.
The industry rebounded from the global pandemic crisis with 159 transactions, a 20% increase over 2019. However, that number obscures recent momentum, the report says.
Forty-eight transactions in the fourth quarter came on the heels of the previous quarter’s record 44 transactions, the first time the industry posted more than 40 transactions in a quarter.
This was part of the third stage of a “surge,” as outlined in DeVoe’s first quarter 2020 report: A transaction volume high in January and February was followed by a lull from March 20 to June 20 when sales were delayed; next, RIA M&A snapped back to life during the third stage, from June 20 to Dec. 20.
Plus, the industry experienced its highest level of total assets under management affected by transactions in a single year: $499.6 billion in 2020, representing a 44% increase above 2019’s $347 billion and a roughly 1% jump from 2018′s $494 billion.
The new report says the surge will likely evolve and continue into the early months of this year.
Professionally managed firms with more than $1 billion in assets under management are the primary drivers of the surge in activity. In 2020, there were 46 deals of between $1 billion to $5 billion, compared with 25 the year before.
Large firm sales drove up the average assets under management of sellers to $1.02 billion, about 40% higher than the average of $743 million in 2019.
According to the report, DeVoe & Company expects a steady increase of small and midsize firms to sell externally over the next several quarters, extending the surge.
The most active acquirers last year — each with eight acquisitions — were CI Financial, Creative Planning and Hightower Advisors.