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

Industry Spotlight > RIAs

Large RIAs Drive M&A Tied to Record $500B in Assets in 2020: Report

Your article was successfully shared with the contacts you provided.
mergers and acquistions puzzle pieces (Image: Shutterstock)

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.

Industry Trends

The report highlights two emerging industry trends. 

One is the rise of “meta firms,” a term DeVoe coined to describe the roughly two dozen wealth management firms that have M&A as a core component in their business strategy and have become major acquirers.

The other is the growing importance firms assign to culture in M&A. The reported notes that some organizations are looking beyond the details of valuation and deal structure and are taking a proactive approach to company culture. 

They feel that the softer aspects of a transaction, such as culture, mission and strategy, should be given equal or even more weight than the economics of the transaction.

“A transaction is a little bit like Hotel California,” Hightower CEO Bob Oros said in the Devoe & Co. report, alluding to lyrics of the popular Eagles’ tune:  “You can check out any time you like, but you can never leave.”

“Culture and fit are critical determinants of whether a transaction is going to be successful,” Oros explained.

The top 12 firms, which handled 40% of transactions in 2020, were:

  • CI Financial, 13*
  • Hightower Advisors, 9**
  • Creative Planning, 8
  • Mercer Advisors, 7
  • Buckingham Wealth Partners, 5
  • EP Wealth, 5
  • Wealth Enhancement Group, 5
  • Emigrant Partners, 4
  • Allworth Financial, 4
  • MAI Capital Management, 4, and
  • Cerity Partners, 4

*CI Financial states that it completed 13 RIA transactions in 2020, including several of its affiliated entities;  Devoe & Co. reported CI’s M&As tally in 2020 at as eight deals. 

**Hightower says it conducted nine transactions in 2020, including a merger deal for one of its member firms; Devoe & Co. reported Hightower’s M&As tally in 2020 at eight deals. 


© 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.