RIA M&A: Heading for a record year?
October 25, 2016 2:31 PM
Maintaining merger momentum
2016 is on track to break the record for RIA M&A activity.
Only 24 deals in the fourth quarter are needed to break the previous record of 132 transactions, set last year.
“Q3 2016 is the eighth successive quarter of 30 or more transactions,” says David DeVoe, managing partner at DeVoe & Co., which has released the third quarter results for its RIA Deal Book survey. DeVoe also spoke on the topic at the annual Schwab Impact conference in San Diego.
What started as an apparent spike in RIA sales two years ago has sustained itself as a perceived surge, and now, according to DeVoe, "has evolved into an apparent new normal of heightened M&A activity.”
To learn more, click through our slideshow.
Only 24 deals in the fourth quarter are needed to break the previous record of 132 transactions, set last year.
“Q3 2016 is the eighth successive quarter of 30 or more transactions,” says David DeVoe, managing partner at DeVoe & Co., which has released the third quarter results for its RIA Deal Book survey. DeVoe also spoke on the topic at the annual Schwab Impact conference in San Diego.
What started as an apparent spike in RIA sales two years ago has sustained itself as a perceived surge, and now, according to DeVoe, "has evolved into an apparent new normal of heightened M&A activity.”
To learn more, click through our slideshow.
A total of 109 M&A transactions were tracked through the first three quarters of this year, compared to 100 deals executed during the same period in 2015, according to DeVoe's research.
Quarterly M&A activity remained robust, with 37 transactions in the most recent quarter. In the last two years, M&A activity consistently recorded more than 30 deals in each quarter.
In 2016, large firms managing assets between $1 billion and $5 billion are selling in record numbers. During the first three quarters, a total of 24 large sellers executed transactions, versus 17 in 2015 and only nine in 2014.
The average AUM of established RIA sellers exceeded $1 billion this year.
“These highly-prized firms are sought after by the widest breadth of acquirers, including consolidators, banks, RIAs and private equity firms,” according to Tim Forest, a DeVoe & Co. managing director.
“These highly-prized firms are sought after by the widest breadth of acquirers, including consolidators, banks, RIAs and private equity firms,” according to Tim Forest, a DeVoe & Co. managing director.
Sub-acquisitions, or an acquisition made by an affiliate of a consolidator (that itself has already been acquired) continues to gain momentum. The number of sub-acquisitions in 2016 is set to triple the number of similar transactions in 2014.
With the parent company’s capital backing and M&A expertise behind them, affiliates have the ability to acquire more aggressively and with greater success than a typical RIA.
With the parent company’s capital backing and M&A expertise behind them, affiliates have the ability to acquire more aggressively and with greater success than a typical RIA.
If sub-acquisitions are assigned to the consolidator that financed the deal, the percentage of deals done by consolidators like Focus Financial is an impressive 57%, far larger than any other category of buyer.
