RIA M&A Deals Down Marginally in Q2: Echelon Partners
M&A activity in the wealth management space decreased slightly in the second quarter of 2023, matching a second-quarter trend from 2020 to 2022, according to Echelon Partners’ “2Q23 RIA M&A Deal Report.”
There were 65 deals announced, down from 75 in the first quarter, when assessing registered investment advisory firms with more than $100 million in assets. Financial advisors with over $100 million in assets who left their businesses to join RIAs are also included, noted the M&A consultancy firm.
“In 2Q23, quarterly deal volume fell to its lowest point since 2Q [2021],” the report noted. “This is partially driven by macroeconomic uncertainty affecting all industries but is also largely due to the seasonality in wealth management M&A activity.”
“The relatively low volume this quarter is consistent with historical trends as the second quarter is typically the least active quarter of the year in terms of deal announcements,” added Echelon.
Overall transaction value for all industries dropped by 44% in the first half of 2023 compared with the same period in 2022. However, during the same period, the industry experienced a notable increase of 38.4% in total transacted assets under management, a proxy for transaction value, Echelon noted.
Some of the biggest dealmakers were in asset management and private equity, including Bain Capital LP, Flexpoint Ford LLC, Ares Management Corp., Leonard Green & Partners LP, Stone Point Capital LLC and Atlas Partners.
The report also highlighted that sizable investments were made in RIA targets with more than $1 billion in assets. Moreover, the second quarter outperformed the reported count of 33 transactions in the first quarter by 9%.
Echelon pointed to the higher assets under management transacted in the first half of the year as an indication “that wealth management M&A remains resilient.”
Still, Echelon revised its annual deal volume for 2023 down to 300, which would still make it the third busiest year, behind 341 deals in 2022 and 307 in 2021.