Merger-and-acquisition activity in the RIA industry experienced a landmark year in 2024, according to DeVoe and Co.’s fourth-quarter report, with a record 272 announced transactions. That’s eight more than the previous record set in 2022.
The year ended with 81 transactions in the fourth quarter, breaking a multi-year plateau of some 60 transactions per quarter. October set a monthly record with 39 deals, up from 21 in October 2023. Results in November and December were more closely aligned with 2023 levels: 19 transactions in November and 23 transactions in December.
“This momentum is likely to continue through the new year, and the industry may well be back on track for a steady increase in M&A going forward,” said David DeVoe, DeVoe & Co.’s founder and CEO.
For its quarterly report, DeVoe & Co. focuses on transactions of $100 million or more in assets under management in order to optimize the statistical accuracy of its reporting and screen out SEC-registered hedge funds, independent broker-dealers, mutual fund companies and other companies that do not operate as traditional RIA firms. The report also excludes the “advisors joining RIAs” category unless there are important developments.
Buyers and Sellers
The Federal Reserve’s September decision to lower rates by 100 basis points spurred private equity-backed consolidators into action, driving 78% of fourth-quarter transactions. This marked an increase from the 69% share these acquirers held in the first three quarters.
The fourth quarter saw a shift in buyer dynamics. RIA buyers captured 36% of total transactions in 2024, up from 29% in 2023, while consolidators’ activity fell to 44% for the year, down 3 points. The market share of the Other buyer category — private equity firms, broker-dealers, banks and all other RIA acquirers — declined slightly, accounting for 20% of all transactions, down from 24% in 2023.
Last year, larger firms sold at a higher velocity than small RIAs. Average assets under management increased to $929 million for firms with between $100 million and $5 billion. These midsize sellers enjoyed a modest uptick, 20% of transactions, up from 17% in 2023.
DeVoe & Co. said this segment’s increased activity reflects growing interest from serial acquirers who like these firms’ more attractive pricing relative to larger sellers and their potential for both geographic expansion and “tuck-ins” to established large offices.
Mega-sellers, those with more than $5 billion in assets, represented 13% of transactions, the highest level since the record-setting 14% set in 2017.
The market share of sellers with assets between $100 million and $500 million shrank year over year as activity accelerated among larger sellers. The report noted that this segment represents the majority of all RIAs, consistently comprising the largest percentage of total transactions.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.