RIA dealmaking activity was off the charts in 2021 and could move higher in 2022, says Gabe Garcia, managing director and head of corporate development for Cresset Partners.
“The momentum and intensity will continue for at least the next 12-24 months [since] strategic acquirers are plentiful, the cost of capital is low, [and] private equity is seeing what wonderful businesses [RIAs] are and that the recurring cash flow is very attractive,” explains Garcia in a podcast interview with ThinkAdvisor.
He made these remarks just ahead of the 2021 ThinkAdvisor LUMINARIES awards ceremony in New York last November. Garcia was a judge for the industry awards, which recognize advisors, BDs, RIAs, asset managers and other firms for excellence in several categories.
Noting that RIA M&A activity was on track to surpass 2020’s record-setting level, Garcia said: “Through Q3 , there have been more transactions and RIA deals than in all of 2020.”
There were 307 deals last year, a 50% increase over 2020, according to Echelon Partners’ RIA M&A Deal Report.
Leading the effort to identify compatible firms with which Cresset, an employee-owned multi-family office, can partner, Garcia says that “price compression, margin compression, added technology needed to deliver a digital experience for three distinct demographics: millennials, Gen Xers and boomers, create an intense need to gain scale.”
A 30-year industry veteran, Garcia was previously with E-Trade Advisor Services, BNY Mellon’s Pershing and Charles Schwab.