RIA M&A Activity Hit Record Highs in 2022, But Is a Slow Down Ahead?

M&A activity has been 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, marking 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, according to the 2022 RIA M&A Deal Report. 

Despite the strong volume, transactions in the fourth quarter of 2022 fell 15.5% from 84 in the third quarter and 24.5% compared with the fourth quarter of 2021, when 99 transactions occurred. Average assets per deal declined 23.3% year-over-year, from $2 billion in 2021 to $1.6 billion in 2022. 

According to Echelon, 2022 was the first time since 2018 that both average assets under management per deal and the number of transactions involving over $1 billion in assets declined. 

Strategic buyers and consolidators led the deal volume in 2022. Often backed by private equity firms, strategic buyers and consolidators accounted for 42.6% percent of all deals. According to the Echelon report, 69.7% of all M&A transactions either involved a private equity-backed buyer or resulted from direct investment by a private equity firm. 

Mercer Advisors, one of the largest RIA consolidators with over $46 billion in client assets, led with 20 deals in 2022, followed by Wealth Enhancement Group with 14 deals and Creative Planning with 13 deals. 

Echelon expects M&A activity within the wealth management space to continue to grow over the long-term thanks in part to secular drivers such as an aging workforce of advisors and succession planning.