RIA M&A off to roaring start in 2015

RIA M&A off to roaring start in 2015
Firms are making more and bigger deals as market growth boosts valuations and fuels activity.
NOV 09, 2015
Mergers and acquisition activity among registered investment advisers may be a lagging market indicator as market growth finally seems to be boosting the number and size of deals in the channel. In the first half of 2015, there were 37 deals, up from 29 over the same time last year, according to a survey of around 1,000 firms by Charles Schwab & Co. Inc. The average size of the assets of the firms acquired in those deals ticked up to $1.35 billion, the highest since 2009 when it was $1.7 billion. Eleven of the deals were for firms with $1 billion or more in assets. Growth of the RIA channel and strong markets have helped increase valuations and put firms in a position to invest, according to Jonathan Beatty, senior vice president of sales and relationship management at Schwab Advisor Services. “We saw a fairly significant uptick in the first half of 2015 both in terms of the number of deals, but also in the dollar volume of deals,” Mr. Beatty said. “It's interesting that we've already exceeded in dollar amounts last year's deal size in the first half of this year.” What Schwab refers to as strategic acquiring firms, which are roll-up type firms such as United Capital or Focus Financial Partners, showed the most growth and comprised 43% of the deals in the first half of 2015 compared with around 37% last year. RIAs were responsible for 38% of deals. Schwab's data are self-reported from firms that custody with Schwab. The data is not independently verified, but is backed up anecdotally by the deals announced this year, most recently by Bronfman E.L. Rothschild's purchase of Highline Wealth Management, which created a $3.6 billion firm. That followed a handful of other billion-dollar deals earlier in the year by firms such as First Republic Bank and AMG Wealth Partners, which has invested in several RIA firms. Whether the trend will continue may depend on how the markets perform, warned Mr. Beatty. “I maybe had more confidence two weeks ago before we started in this market correction,” he said. The trend “depends on whether we're in a correction or a long-term secular move whether that will be a headwind in the second half of the year.”

Latest News

SEC bars ex-broker who sold clients phony private equity fund
SEC bars ex-broker who sold clients phony private equity fund

Rajesh Markan earlier this year pleaded guilty to one count of criminal fraud related to his sale of fake investments to 10 clients totaling $2.9 million.

The key to attracting and retaining the next generation of advisors? Client-focused training
The key to attracting and retaining the next generation of advisors? Client-focused training

From building trust to steering through emotions and responding to client challenges, new advisors need human skills to shape the future of the advice industry.

Chuck Roberts, ex-star at Stifel, barred from the securities industry
Chuck Roberts, ex-star at Stifel, barred from the securities industry

"The outcome is correct, but it's disappointing that FINRA had ample opportunity to investigate the merits of clients' allegations in these claims, including the testimony in the three investor arbitrations with hearings," Jeff Erez, a plaintiff's attorney representing a large portion of the Stifel clients, said.

SEC to weigh ‘innovation exception’ tied to crypto, Atkins says
SEC to weigh ‘innovation exception’ tied to crypto, Atkins says

Chair also praised the passage of stablecoin legislation this week.

Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest
Brooklyn-based Maridea snaps up former LPL affiliate to expand in the Midwest

Maridea Wealth Management's deal in Chicago, Illinois is its first after securing a strategic investment in April.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.