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RIA M&A: Deal Volume and Size Hit Record Highs

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Expect the trend of more and bigger RIA M&A deals to continue.

Transaction volume for mergers and acquisitions of independent advisory firms in 2015 reached a 10-year high of 84 deals, up 56% from 2014 and 127% from 2006, according to Charles Schwab Advisor Services Deal Data report.

Read more: Biggest RIA M&A Deals Set Stage for Active 2016

The size and value of deals also increased.

Average annual transaction size last year was $1.3 billion, up 53% from 2014 and the largest average since 2009. Total annual deal value jumped 143% from $47.4 billion in 2014 to $115.4 billion in 2015.

Momentum for increasing deal volume and size has been building for the past four years, says Jon Beatty, senior vice president for sales and relationship management for Charles Schwab Advisor Services.

"Buyers and sellers have to agree, and they were supported by the macro-economic environment," Beatty says. "And the number of quality buyers has grown significantly."

Indeed, nearly one-third of the approximately 2,000 RIAs with over $1 billion in assets under management surveyed by Schwab said they wanted to buy another RIA, according to Beatty.

Read more: Fiduciary Push to Drive More M&A

"There are more enterprise-type firms and they're looking for specific capabilities, such as talent or technology, to help them grow and achieve scale and operational efficiencies," Beatty says. "More buyers are coming on line and I think we're going to see this healthy pace of M&A continue."


Sellers are also likely to continue to be attracted to like-minded buyers, he added.

Last year independent RIAs and strategic acquiring firms combined to account for over two-thirds of all acquisitions, while private equity firms and banks made up 24% and 4% of buyers, respectively, according to the Schwab report.

Big deals drove the market last year, a trend Beatty also sees continuing.

"The volume of assets was driven by larger deals and Financial Engines buying The Mutual Fund Store is a good example," Beatty pointed out. The Mutual Fund Store had nearly $10 billion in assets and the deal price was announced at $560 million.


The major M&A deals reported so far this year appear to be cut from the same cloth as last year.

Large RIAs such as Aspiriant, EP Wealth Advisors and Sargent Bickham Lagudis have bought smaller RIAs and a $2.7 billion wealth manager, Atherton Lane Advisors, was also acquired.

The Atherton Lane deal may be an outlier, however.

The Silicon Valley-based RIA was bought by BNY Mellon, one of the country's largest banks, for an undisclosed price.

"A bank buyer is a bit unusual in this marketplace," Beatty says.

Schwab's data covers transactions for RIAs with assets under management exceeding $50 million and includes advisors who joined an existing RIA and received equity consideration.

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