The number of mergers and acquisitions among registered investment advisors has topped 200 in 2021, making it a record-shattering year for RIA deals — and with advisors still a month away in the new year.
Consulting Firm and Investment Bank, DeVoe & Co. This year’s RIA M&A deal volume is up 45% as compared to 2020, which was a record-setting year in itself, according to the U.S.’s research.
“Last year, we had a big increase to 159” [deals], “says the firm’s founder David DeVoe. “And yet, here we are, crossing the 200 mark. It’s a surprise.”
According to DeVoe, several long-running trends—increasing valuations, an influx of well-capitalized buyers and an aging advisory workforce have contributed to the booming M&A market among RIAs.
“I’ve been doing it for 18 years, and today’s pool of buyers is the strongest I’ve ever had,” he says. “Buyers have sophisticated management teams, and they have virtually unlimited capital.”
In recent years, private-equity firms and banks have been buying stakes in RIA, giving them funds to acquire other firms. So-called aggregators are also scouting smaller RIAs to get maximum scale.
Those factors have always created great advisory firms. For example, Cerity Partners said last week that it had merged with San Francisco-based Bingham, Osborn & Scarborough. The deal boosts the West Coast presence of Cerity Partners, which it says now offers advice on more than $40 billion in client assets. Firm ranked 14th baron’s Top 100 RIAs for 2021.
In addition to the longstanding factors that fueled RIA M&A deals, Devo adds two other highlights to this year: the COVID pandemic, which may have prompted some advisors to cash out and enjoy retirement, and taxes. Is. According to DeVoe, given the possibility that Democratic control of Congress and the White House could lead to higher taxes, some advisers decided this year was an opportune time to sell.
“We saw a huge increase in seller activity, with sellers reaching out to us saying ‘I want to make a deal before the end of the year.’ This is a one-time big event for 2021,” he says.
Devo anticipates a flurry of deal announcements before December 31. For the next year, M&A activity will likely maintain a warm momentum, he says.
Write to Andrew Welsh at [email protected]