How Merchant Investment Management supports RIAs and their life's work

As dealmaking activity in the RIA space hits a new high note, one of the leaders at Merchant Investment Management argues that the M&A story speaks to a profound inflection point in the industry. 

"We're at a point in time in the market, where more so now than ever, real companies have been built," Tim Bello, co-founder and managing partner at Merchant, told InvestmentNews in a recent interview. "Wealth management firms have evolved, from practice, to business, to company, to financial services enterprise."

RIA M&A hit a new high water mark in 2024 with 272 deals, according to a new report by DeVoe & Company. That's part of a broader years-long trend that, Bello said, is happening as countless independent advisors come to a crossroads.

"They need a way to put a value to their life's work. One way is to get a valuation done, but unless there's a transaction that happens at a particular level of valuation, it's not marked in the market," Bello said.

The power of patient capital

While it operates differently from a traditional private equity investor, Bello said Merchant is a strategic capital provider and partner for "great people that run very good businesses and have an interest in continued growth and continued support for their clients." It launched around 10 years ago with a focus on minority, non-control investments – which have since become a prominent fixture in RIA deals – but has since evolved to being what Bello calls a "lifecycle equity partner."

"By listening to the market and engaging directly with CEOs and entrepreneurs, we’ve learned that they truly seek a capital growth partner that adapts alongside their business, career, and even future generations," he said. "Whether it’s supporting second- and third-generation leadership or providing capital that aligns with long-term goals, our flexible structure and patient capital uniquely position us to deliver."

While cultural fit is crucial for any partnership, Bello noted that selling control of their practice is an inherently emotional decision for any advisor. That means deal discussions should ideally unfold over months, possibly even up to a year, allowing both buyer and seller to perform thorough due diligence on each other.

"You learn so much about that person, their business, their team, and how they operate," he said. "The business's revenue, its expenses, its profits ... you can get all that technical valuation done in one minute. But we're thinking about these investments as perhaps 10- to 20-year commitments, and potentially multi-generational connections."

One example of that long-haul philosophy came from Merchant's partnership with $20 billion New Jersey-based Summit Financial, which landed its first deal of 2025 via a minority partnership with GenEx Consulting. That transaction came as Merchant dialed up its interest in Summit to majority level, as per a December 2024 Form ADV filing reported earlier by CityWire.

"Evolving beyond minority stakes to lifecycle equity partners means Merchant has the flexibility to invest across the spectrum, from minority to majority positions, ensuring we can meet firms where they are and grow with them," Bello said.

Looking for character rather than just scale

One major undercurrent in the RIA deal space is the rise of mega-deals, with billion dollar-plus firms increasingly attracting interest due to their strategic scale and breadth of service offerings. The DeVoe 2024 report said the average seller's assets under management last year, excluding mega-RIAs with more than $5 billion, reached $929 million. Echelon has yet to release its full 2024 deal report as of this writing, but it has projected that the number of transactions involving companies with at least $1 billion in assets would rise by 12.1 percent compared to 2023.

While declining to speak for other capital partners in the marketplace, Bello said Merchant's approach goes beyond looking at the size of a firm, fundamentally looking at whether it's a good business run by people who are good at what they do.

"We go into every conversation with open eyes," he said. "I think about it as, 'This business could be in the early, early, early innings of what could be tremendous growth over the next 10 years. And if they have $450 million [in assets] today, maybe it'll be $5 billion in time with our help.'"

Recently, Merchant has intensified its strategy with a focus on CPA firms. Another priority is to maintain and grow its global presence. Apart from Australia and key European locations, it officially inked its first Canadian partnership in November last year with a minority stake in SPM Financial, a London, Ontario-based independent. Merchant is also selectively considering opportunities in the Middle East and Asia, Bello said.

Looking broadly across the US RIA space in 2025, advisors must stay current on providing the best solutions and practices for their clients, Bello said. And given the ever-present risk of more shocks and disruption, RIAs have to build and grow durable businesses with the right talent, which opens the door for even more capital providers to step in.

"Some people in the capital business don't want to see more entrants come in, because it brings more competition.I think it continues to validate what we were at the forefront of when we started Merchant," Bello said. "I think you're going to see more capital coming in, more deal activity, and just more excitement for this evolution in the independent space."