Fidelity tracks M&A trend of more deals involving smaller RIAs

A new report on 2022 dealmaking shows a growing number of acquisitions of firms with less than $500 million under management.

Fidelity Investments counted 26 registered investment advisor transactions in December that combined for $9.7 billion in assets under management, which represented both a dramatic spike in the monthly number of deals and a dramatic decrease in the deals’ assets under management.

According to the Fidelity Wealth Management M&A Transaction Report released Friday, the 44% month-over-month increase in the number of deals and the 49% drop in assets associated with those deals reflects a continuation of a shift toward smaller size transactions.

More than 80% of acquisitions in December included RIAs with less than $500 million under management, and only one deal during the month reached the $1 billion mark.

Laura Delaney, vice president of practice management and consulting, who recently took over Fidelity’s M&A research from Scott Slater upon his retirement, said the trend continues to be toward increasing deal activity in the RIA space.

“Full year 2022 RIA M&A activity increased 7% vs. 2021, but deal size declined by 18%,” Delaney said in a statement.

“Despite another interest-rate rise in December, strategic RIA buyers and their PE sponsors continue to report strong pipelines with relatively stable valuations,” she said.

According to the report, December was representative of the year as a whole, which saw 229 transactions, up 7% from 2021, with $283.8 billion in assets, down 18% from 2021.

The median deal size in 2022 fell by 32% to $478 million.