The Dealmaking Outlook

M&A has started out strong in 2024, according to consulting firm DeVoe. Here’s why things are looking up.


Illustration by RIA Intel

After nearly a decade of growing RIA deal volume, mergers and acquisitions fell slightly in 2023. However, things may be looking up for 2024, according to DeVoe & Company, a consulting firm that specializes in M&A and wealth management companies. The company found that during the first two months of 2024, dealmaking grew 20 percent compared with the same period in 2023, a positive sign for the wealth management industry.

The first quarter historically is one of the weakest in terms of deal volume due to the seasonality of dealmaking. However, in the first two months of the year, 49 transactions were announced, compared with 41 transactions during the same period last year.

“RIA activity has been accelerating over the last five months,” David DeVoe, founder and CEO of DeVoe & Company, said in a statement. “Sellers are returning to the market, as a growing number pursue external sales to solve for their succession plans, while others continue to seek the benefits of scale.”

The company recently released its 2023 RIA M&A outlook and found that only about a fifth of RIAs will be able to sell internally, due to the rising value of RIAs. According to the report, only 18 percent of RIAs believe their next generation of internal leaders can afford to buy out the owners. This is down from 29 percent in 2022 and 38 percent in 2021.

The rest will have to look externally, and they need to do it soon; 109,093 advisors plan to retire over the next decade, accounting for 37.5 percent of the total industry headcount and 41.5 percent of total industry assets, according to Cerulli Associates.

“Advisors who realize they can’t sell internally naturally are shifting to plan B: an external sale,” wrote DeVoe & Company. “It is reasonable to extrapolate that these dynamics will drive an overall increase in M&A during the next five to seven years.”

However, succession planning is just part of the reason RIAs are looking to sell.

According to DeVoe & Company, more and more owners are seeking liquidity, with 57 percent of potential sellers citing liquidity as a key driver to pursuing a sale. Growth, cited by 49 percent of respondents, fell from the No. 1 spot to the No. 2 spot compared with last year, indicating a shift in priorities and a response to their limited economic growth.

“Advisors have been coming to terms with their lack of true organic growth,” wrote DeVoe & Company. “To paraphrase Warren Buffett, as the tide of market returns went out over the last two years, most advisors realized how threadbare their marketing strategy had become.”

Organic growth has been a failure point for many RIAs in recent years. Fidelity’s 2023 RIA benchmarking report found that organic asset growth for wealth management firms fell below 4 percent in 2022, compared with 8.2 percent in 2021. Many RIAs counteract this by growing inorganically through dealmaking.

“Another reason advisors may be keen on acquiring is out of desperation to grow — somehow,” wrote DeVoe & Company. “As advisors struggle to add new clients, more advisors may see inorganic growth as a panacea for their organic growth struggles.”

According to the report, fewer advisors expect an increase in M&A, and more expect a decrease. However, 65 percent of RIAs said they plan to make an acquisition in the next two years, an 11 percentage point increase compared with 2022 and the highest percentage in four years.

RIAs that are planning on selling could see a boost in valuations. About 16 percent of respondents expect an increase in valuations in the next year, double the percentage of respondents in 2022.

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