RIA M&A in 2020 to look a lot like 2019: Fidelity’s Canter
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This year will close with about 200 large RIA deals, a number that will probably be reached in 2020 as well.
After a white-hot year of mergers and acquisitions by large registered investment advisers, the RIA industry should expect more of the same in 2020, said David Canter, executive vice president at Fidelity Clearing & Custody.
The industry will close 2019 with just about 200 acquisitions of large RIAs, and next year should see a similar amount, said Mr. Canter, who was speaking at the DeVoe G2 Forum on Monday afternoon in Miami Beach.
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“We’re seeing more and more assets being trade at $1 billion or more,” said Mr. Canter. “And 2020 is probably going to be a record year, and we believe there are a lot of reasons why, but it’s still pretty small when you think of the total denominator of 13,000, SEC registered RIAs, meaning those firms have at least $100 million in assets under management.”
In other words, the M&A market is not anywhere close to being tapped out, Mr. Canter said.
“We believe, [the market] is going to continue to heat up, for a number of reasons,” he said.
First, there is a flood of capital from private equity funds and other sources in the marketplace, and the historic bull market in stocks only makes firms more valuable. Finally, the founders of firms are getting older and there is no simple way to put a succession plan in place.
“It’s going to be about concentration, not consolidation, and we will probably see about another 200 deals next year, but we are not going to see 500,” he added.
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