Evening Brief – 03-02-23

M&A activity was hampered in many sectors in 2022, but it remained unbridled in the investment advisor space as wealth management M&A activity reached a new all-time high, suggesting the industry had both the financial means and the appetite to make strategic moves to achieve scale and gain competitive strength despite less optimal economic conditions.

It marks the tenth consecutive year the number of deals in the industry has increased, according to a report by Echelon Partners, a boutique investment bank that closely tracks M&A within the wealth and investment management industries.

There were 341 transactions disclosed in 2022, representing an increase of 11.1% year-over-year and eclipsing the previous high of 307 set last year.

Yet, transactions in the fourth quarter fell 15.5% from 84 in the third quarter and 24.5% compared with the fourth quarter of 2021, when 99 transactions occurred.

These trends could continue in 2023 as buyers and sellers weigh rising interest rates and high valuations, but Echelon’s research suggests the view for RIA M&A is still one of growth, as some key shifts driving dealmaking in the RIA space gave way to another record year in 2022, with more promise for 2023.