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 charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees
SEC charges Chicago-based investment adviser with overbilling clients more than $2.5M in fees

Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.

Apella Wealth comes to Washington with Independence Wealth Advisors
Apella Wealth comes to Washington with Independence Wealth Advisors

The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.

Citi's Sieg sees rich clients pivoting from US to UK
Citi's Sieg sees rich clients pivoting from US to UK

The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.

US employment report reactions: Overall better than expected, but concerns with underlying data
US employment report reactions: Overall better than expected, but concerns with underlying data

Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.

Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading
Creative Planning's Peter Mallouk slams 'offensive' congressional stock trading

"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.

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.