RIA M&A surges back in the third quarter: Report

The marketplace for registered investment advisors saw 'a rebound to levels of deal activity not seen since early 2022,' according to Echelon Partners.

The mergers and acquisitions marketplace for registered investment advisors saw a summer surge this year, according to a report by Echelon Partners, a boutique investment bank focused on the investment management and wealth management industries.

According to Echelon, in the quarter ended Sept. 30, RIA buyers announced 86 transactions, passing the 65 announced in second quarter by 32%. That made it the most active third quarter on record, according to the tally by Echelon, which likely shows some pent-up demand being released.

The level of deal making in the RIA marketplace is “a rebound to levels of deal activity not seen since early 2022,” according to the report.

And Goldman Sachs Group Inc. was a busy player.

“Goldman Sachs was both a buyer and seller in the quarter’s top deals, acquiring a stake in World Insurance Associates [via Goldman Sachs Asset Management], while also selling Goldman Sachs Personal Financial Management, [created after its acquisition in 2019 of United Capital Financial Partners] to Creative Planning,” according to Echelon.

Both those deals were announced in August.

Goldman Sachs will be investing more than $1 billion into insurance brokerage World Insurance Associates, which currently has a total enterprise valuation of approximately $3.4 billion, the company said in an Aug. 21 press release.

A week later, Goldman Sachs said it was selling Personal Financial Management to Creative Planning, a leading RIA with $245 billion in client assets. Terms of that deal were not released.

“Most transactions take on average nine months to complete, so [the third quarter’s] increase is likely reflective of the increased economic optimism buyers and sellers began to feel in early 2023 as capital market conditions started to improve,” according to the report. “Strategic acquirers continue to dominate the wealth management M&A ecosystem, accounting for 90.6% of transactions in [the third quarter].

“These sophisticated acquirers deploy significant capital toward M&A, and industry consolidation remains as prominent as ever.” according to Echelon.

A series of large deals were struck in September, the Echelon report noted.

Private equity investor Carlyle Group said it was providing a cash infusion to acquisition-hungry Captrust Financial Advisors. Funds managed by Carlyle made “a minority growth investment” in the firm, Captrust said.

The investment from Carlyle marked the second such PE stake in the firm, following GTCR’s taking a 25% stake in Captrust in 2020. Since then, Captrust has purchased 29 firms and boosted its valuation from $1.25 billion to $3.7 billion, according to the firm. Currently, it oversees more than $832 billion.

Also in September, Cetera Holdings said it was acquiring Avantax Inc. for $1.2 billion; Avantax has 3,100 financial advisors working with $84 billion in client assets. And rounding out the large deals for the month, private equity investor Abry said it was investing a minority stake in Prime Capital Investment Advisors, an RIA with $22 billion in client assets.