Solid start to wealth management deals in 2024: report

The first three month of 2024 were the second best start to the year on record for wealth management firms in regard to deal making and transactions, according to a new report from Echelon Partners, a boutique investment bank focused on mergers and succession planning in the wealth and investment management industries.

In the first quarter of the year, there were 90 announced transactions, according to Echelon, representing a 20% increase over the same period last year, when 75 deals were announced. The first quarter of 2024 was the second most active first quarter on record, according to Echelon’s tally.

The rest of the year should continue to see a busy M&A market, according to the report. The wealth management industry is on track to announce a total of 330 deals in 2024, a moderate increase from the 321 transactions announced last year, according to Echelon’s RIA M&A deal report, which the bank publishes quarterly.

The mergers and acquisition market for RIAs and wealth management firms has been booming for almost a decade and red hot since COVID 19, as both well-established buyers and newer aggregators began duking it out to buy firms. Even the spike in interest rates and record highs for stocks, both of which make acquisitions costlier, have not dampened the demand to buy registered investment advisors and broker-dealers.

“Regarding the frequency of deals, I don’t see that slowing down,” said Peter Nesvold, partner at Republic Capital Group. “As long as we have a reasonably sound economy, we’ll see the march upward of both size of the firms, with billions in assets, along with the frequency of mergers and acquisitions.”

“We’re seeing continued deal flow of mid-sized and smaller RIAs, along with broker-dealers, too,” said Larry Roth, managing partner at RLR Strategic Partners. “I think 2024 is going to be another good year for M&A.”

Leading wealth management firms had a big impact in the first quarter, according to Echelon.

“While RIAs continue to dominate the overall wealth management buyer population makeup, this quarter’s largest transactions included a diverse group featuring RIAs, private equity firms, broker dealers, asset managers, and insurance companies,” according to the report.

“LPL Financial announced the largest deal of the quarter, acquiring $100 billion in assets Atria Wealth Solutions in February,” Echelon noted. “Other notable large transactions include Mariner’s acquisition of $90 billion in assets AndCo Consulting and Focus Financial Partners’ acquisition of management’s stake in $30 billion in assets SCS Financial.”

Meanwhile, Echelon expects a slight uptick in transaction value and volume this year.

In the first quarter of the year, the average assets per deal maintained an upward trajectory, hitting $1.8 billion in assets, a slight increase from the $1.7 billion recorded in 2023, according to Echelon.

The investment bank projects that the average assets per deal for 2024 maintain above $1.8 billion in assets, signaling a modest rise compared to both 2023 and the first three months of this year’s figures.