These Are the Biggest Takeaways From the Latest Wealth Management M&A Data

Despite falling deal volume, transaction size increased in the second quarter of 2023.


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The number of mergers and acquisitions with RIAs fell by 15 percent in the second quarter of 2023, according to a new report by Echelon Partners, an investment bank and consulting firm focused on wealth and investment managers.

Sixty-five transactions were recorded in the second quarter, down ten transactions from the 75 announced in the first quarter. According to Echelon, this is due in part to macroeconomic uncertainty, but also to historical trends.

Since 2020, the second quarter of the year has been the weakest in terms of deal volume; there were 35 deals in 2030, 54 in 2021, and 91 in 2022. According to Echelon, buyers and sellers tend to close more deals at the beginning and end of the year, which leads to a seasonality in deal announcements.

However, Echelon’s estimated annual transaction volume also fell relative to the previous two years. The investment bank estimates there will be 300 deals this year, down nearly 30 percent from the 341 deals recorded in 2022 and the 307 deals in 2021.

But despite a declining number of deals, transaction size is on the rise.

During the first half of the year, total AUM transacted — a proxy for transaction value, according to Echelon — increased 38.4 percent. This increase is “encouraging,” according to Echelon, given the higher cost of capital and the activity in other industries.

Additionally, large RIAs continued to be a major focus of acquirers. More than half of all transactions in the second quarter involved firms with more than $1 billion in AUM. Billion-dollar RIAs accounted for 57.1 percent of the total deals in the quarter, up 10 percent from the first quarter. Echelon expects average assets per deal to exceed that of 2022, and the figure is on track to finish at the second-highest level recorded.

The consolidation of assets at large RIAs is a decade-long trend. Multi-billion dollar firms are seen as an especially good investment, as they tend to have experienced management and established processes and platforms, according to Echelon.

Strategic acquirers — wealth management firms that acquire other firms to realize synergistic efficiencies, enter new markets, or to introduce new service offerings — make up the vast majority of acquirers this year with 85.7 percent of deals announced by strategic acquirers. Financial acquirers — private equity firms, family offices, holding companies, and other investors who invest with a focus on generating returns — made up the rest.

RIAs remained the dominant strategic acquirer, announcing 48 deals this quarter and increasing their share of M&A activity to 71 percent of deals announced this year. Despite that, private equity continues to have a large foothold in wealth management deals, with 73.2 percent of deals announced this quarter by strategic acquirers involving firms with private equity backing. Private equity also was the second largest subcategory of acquirers, accounting for 12 percent of all acquirers this year to date.

Wealthtech firms that service the RIA market were also an attractive investment opportunity. According to Echelon, Wealthtech deal activity rose by 30 transactions in the second quarter.

In April, Altruist, a venture-backed fintech platform and digital custodian for RIAs, announced a $112 million in a Series D funding round with an investment from Insight Partners and Adams Street. In June, Wealthtech consulting firm F2 Strategy bought wealth management consulting firm Oakbrook Solutions, while at the same time receiving an investment from private equity firm Renovus Capital. In addition, Envestnet recently announced a minority investment in Ategenos Capital, a distributor of model portfolios to third-party platforms that launched in May 2023.

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