Evening Brief – 08.17.23
Following a chilly start to the first half of 2023, July was the hottest month on record for mergers and acquisitions in the registered investment advisory (RIA) and broker-dealer space, according to a report from Fidelity.
There were 19 RIA transactions totaling $29.6 billion in assets under management, as well as one deal involving a broker-dealer with $6.5 billion in assets under management, Fidelity reported.
The study was based on announcements of transactions involving RIAs with more than $100 million in assets under management or advisement but less than $30 billion, as well as broker-dealers with more than $1 billion in assets under administration.
The number of deals jumped 19% from the previous month and 46% from July 2022, while assets increased 32% from June and 43% year on year, according to Fidelity.
The largest transaction was Pathstone’s acquisition of Affiliated Managers Group’s multifamily RIA office Veritable LP, which managed more than $17 billion in assets.
Other major acquisitions included Cerity Partners’ purchase of $2 billion-plus RIA AJ Wealth and the CAPTRUST purchase of $2.3 billon RIA Southern Wealth Management.
Fidelity also stated that private equity continues to play a significant role in wealth management acquisitions, funding all but three of the transactions in July.
First-time buyers continued to enter the market in July, with four new buyers, increasing the year-to-date total of 22.
“Although strategic acquirers continue to execute the majority of transactions in this competitive landscape, we continue to see a handful of first-time acquirers breaking through, which points to the health of the RIA M&A marketplace,” said Laura Delaney, Fidelity’s vice president of practice management and consulting.
Fidelity also pointed out that the transactions were “polarized” in terms of assets involved: over three-quarters of the transactions involved firms with less than $500 million, and the remaining deals all topped $2 billion.
But it is too early to determine whether the record-breaking hot July marks the start of a hotter and stronger trend. Most transactions occurred in the first part of July, with only one transaction occurring after July 19. These deals take an average of seven months to complete, which means that most, if not all, of them began negotiations in 2022, according to Delaney.