acquisition (M&A) activity among registered investment advisers (RIAs) hit
a record in the first quarter, according to investment banking firm DeVoe &
Company. There were 44 M&A deals among RIAs in the first quarter, up 29%
from 34 in the first quarter of 2016.
“The first quarter of 2017 was the most active quarter ever of mergers and acquisitions in the RIA industry,” says David DeVoe, managing director at DeVoe & Company, which has been tracking RIA M&As since 2013. “Advisers are selling and merging to gain the benefits of scale in an increasingly competitive marketplace.”
DeVoe also says that RIAs are looking for the benefits of being part of larger organizations, most notably operational support for such things as compliance and technology. This is borne out by the fact that half of the deals in the first quarter were among smaller RIAs, firms with between $100 million and $250 million in assets under advisement (AUA). Previously, that had averaged 30%.
These deals lowered the average AUA of the transactions to $588 million, down significantly from an average of $1.06 billion in 2016.
Banks stepped up to the plate to acquire RIAs in the first quarter. Typically, they comprise only 2% to 3% of these deals, but they represented 16% of the acquirers in the first quarter. DeVoe says they probably are interested in RIAs’ relationships with high-net-worth clients.
DeVoe & Company’s full report can be downloaded here.