RIA dealmaking rose more than 20 percent in the first quarter of 2024 compared with the first quarter of 2023, according to Echelon Partners, an investment bank and consulting firm focused on wealth management.
In total, there were 90 transactions announced, making it the second-most active first quarter on record, according to the investment bank. 2022 holds the record for the most-active first quarter, with 94 deals.
Echelon also projects that this year’s annual transaction volume, “helped by recent strong market performance and a stabilizing interest rate outlook,” will total 330 deals, up from the 321 deals announced in 2023.
The first quarter numbers are unusual.
The first quarter of the year is historically one of the weakest in terms of deal volume; there were 49 deals in that quarter in 2019, 46 in that quarter in 2020, 76 in that quarter in 2021, and 75 in that quarter in 2023. According to Echelon, most deals take an average of nine months to complete, which suggests that the high number of deals announced this quarter are 2023 deals bleeding into 2024.
Private equity and strategic acquirers continued to play an outsized role in M&A activity. This quarter, strategic acquirers accounted for 85.6 percent of all announced transactions. RIAs, the most dominant strategic acquirers, announced 69 percent of the transactions.
PE was involved in nearly 70 percent of deals, contributing more than $200 billion in assets transacted. Direct acquisition by private equity firms also increased, to 13 percent of all acquirers in 2024 from 9 percent of all acquirers in 2023.
Deals on the whole were larger, totaling more than $210 billion in RIA assets transacted, a 13.1 percent increase from the last quarter of 2023, despite falling five deals short of last quarter’s 95 transactions. The fourth quarter is typically the most-active quarter.
Average assets per deal grew to $1.8 billion, from $1.7 billion in 2023, a trend that Echelon expects to continue in the rest of the year. Of the deals recorded this quarter, 39 percent included assets above $1 billion, a 6.1 percent increase from the first quarter of 2023. Echelon predicts that the percentage of deals involving at least $1 billion in assets will rise by 12.1 percent in 2024 compared with 2023.
Echelon projects that the average assets per deal for 2024 will remain above $1.8 billion, signaling a modest rise compared to both the 2023 and first quarter 2024 figures.
