What You Need to Know
- Echelon said a robust market, more competition from buyers and good deals for sellers accounted for the record activity.
- Branded acquirer acquisitions suggest organizations are emphasizing integration of acquired firms in a cohesive enterprise, service and operating model, Fidelity says.
- Echelon expects the number of minority investments to rise, with larger firms taking part in the activity.
Two recent reports covering the first quarter, from Echelon and Fidelity, identify several trends in the RIA merger-and-acquisitions arena.
Echelon counted 76 deals in the January-to-March period, which it said was a quarterly record and the most active M&A period in the industry’s history.
Echelon’s deal tracking encompasses all transactions involving an RIA with more than $100 million in assets under management.
Fidelity identified 46 first-quarter RIA deals representing $91.4 billion, a 17.3% increase over the record-setting fourth quarter, and five in the broker-dealer channel totaling $64.9 billion.
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It said that from April 2020 through March 2021, 153 RIA transactions representing $244.3 billion in assets under management took place, 33% over the full year 2020.
Fidelity’s account includes transactions involving firms with more than $100 million but less than $20 billion in assets under management or advisement; breakaway advisors or teams leaving a financial institution to join an RIA firm who bring along at least $100 million in assets to the new business; and FINRA-registered independent broker-dealers, including transactions involving firms with more than $1 billion in assets under administration.
According to Fidelity, 20 deals of more than $1 billion each in the first quarter broke the previous quarterly record of 15, set in the third quarter of 2020.
It said branded acquirer acquisitions continued their steady increase in the first quarter, indicating that more organizations are emphasizing the integration of acquired firms in a cohesive enterprise, service and operating model, and a single brand.
“This model is growing in importance as these brands become national in scope and look to create a repeatable client service model,” the report said.