RIA M&A outlook still strong in 2025 amid market uncertainty

Mergers and acquisitions among RIAs are projected to reach new heights in 2025, even as broader market conditions pose challenges to dealmaking in other sectors.

According to a new report from investment bank and consultancy Echelon Partners, the RIA market is expected to see continued consolidation driven by succession planning, firm expansion, and private equity involvement.

“This is particularly noteworthy given the challenges presented by macroeconomic and political uncertainty during the past year,” Echelon CEO Dan Seivert said in the report. “Against the backdrop of a global slowdown in M&A markets driven by high interest rates, political uncertainty, and fluctuating monetary policies, wealth management M&A thrived.”

Echelon reported a 14 percent increase in advisor transactions in 2024, with 366 deals recorded. The firm attributes this growth to industry-specific factors that remain resilient despite economic and political uncertainty.

One of the biggest drivers of deal activity has been private equity, which played a role in 71 percent of the RIA transactions Echelon tracked in 2024, up from 62 percent the year before, as direct investments and recapitalizations ticked up.

“Recapitalization activity is expected to rise in 2025 as investors approach the end of their holding periods and pursue liquidity options,” Seivert said.

Echelon forecasts that private equity will continue to target RIA aggregators that are scaling their businesses and expanding service offerings. The firm projects that 2025 will see an increase in PE-backed transactions, surpassing the 210 recorded last year.

The report also highlighted ongoing growth in breakaway activity, as more advisory teams leave large brokerage firms to establish or join RIAs. While these moves were not included in Echelon’s M&A tally, the firm noted that recruiting activity among RIAs gained momentum in 2024 and is expected to continue in the year ahead.

While succession has traditionally been a dominant driver of M&A activity among RIAs, sellers now have more options beyond full buyouts. Minority recapitalizations and growth investments are gaining traction, offering liquidity or expansion capital while allowing existing owners to retain control.

These transactions, which often involve structured terms such as preferred returns, participating debt, and governance protections, have become increasingly popular as advisors seek flexible deal structures. Echelon reported 52 minority transactions in 2024, marking a 48.6 percent increase from the 35 logged in 2023 – the highest annual total on record.

The report also found that the average RIA involved in a minority transaction, excluding mega-deals with firms managing over $20 billion in assets, oversaw $4 billion in client assets. That figure was slightly lower than the $4.8 billion average recorded in 2023, reflecting a shift in deal activity toward firms of varying sizes.

Echelon attributed the surge in minority deals to several factos, including owners' desire to retain command, founders taking chips off the table to capitalize on elevated valuations, and cultivating tactical partnerships.

"We anticipate another robust year for M&A activity in 2025 given the highly fragmented market, promising growth prospects, and ample supply of motivated buyers and sellers," Seivert said.