M&A deals in the RIA space jumped nearly 50% in average value to a record $1.7 billion in the fourth quarter, according to Charles Schwab.
The period also saw records broken for the number of transactions in a year (94) and the overall value ($135.5 billion), according to the quarterly report released this week by Schwab Advisor Services. The $1.4 billion average deal value for 2016 surpassed every year since 2009.
Additionally, the 20 deals from the fourth quarter valued at $34.6 billion in assets under management led to the highest average for any period in the past 10 years tracked by Schwab.
The $1.7 billion average for M&A is “clearly evidence of a vibrant market for independent advisers,” says Jonathan Beatty, a senior vice president with Schwab’s Advisor Services division. “These record levels of M&A certainly point to a robust marketplace for buyers and sellers.”
Major deals struck in the second half of the year included
Companies acquired more than $1 billion in AUM in 28 separate transactions in 2016, up from 22 in the previous year and just eight a year earlier, the firm’s study noted.
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The total number of RIA M&A deals grew by 12% in 2016 from 84 in 2015 and by 74% from 54 in 2014, according to Schwab. The overall AUM changing hands surged by 17% from $115 billion in 2015 and by 186% from $47 billion in 2014, Schwab’s figures show.
Other RIAs and aggregators comprised the majority of buyers last year. Private equity firms made 20% of the purchases, while banks completed 9% of them and international buyers executed 1% of them.
The overall volume reflects trends such as newly-acquired firms
“It is to be seen whether we will push on to new records or if we’ve established a new plateau for the industry,” Beatty says.