Registered investment advisory firms completed 70 merger and acquisitions in the first three quarters of this year, according to data from Schwab Advisor Services.

As both buyers and sellers return to the table after a slow 2009, they’re setting a record pace and becoming more sophisticated in their goals.

The transactions represented $85 billion in assets under management. The average deal size was $1.3 billion.

Dave DeVoe, a managing director of strategic development at Schwab, said that registered investment advisory firms have become increasingly sophisticated in mergers and acquisitions.

“Ten years ago, RIAs would acquire almost exclusively to grow their client base,” he said. “Now they buy for more strategic reasons—to add services, expertise or to create a succession plan.” There were a record number of “true mergers,” when the buyer and seller are closer in size.

Management buy-outs, when the management of firms that had been previously bought by a registered investment advisor reassume financial control, increased to 15% of all the deals, up from the historical average of 4%. 

DeVoe said that this year is on track to be the fourth successive year that registered investment advisors complete more merger and acquisition deals than banks or other kinds of buyers.

This year is now also on track to match historical trends in deal size, despite a dip in the first half of the year. Typically, about a third of advisor merger and acquisition deals involve assets of a billion or more, a third involve smaller firms with assets of a billion to $250 million, and a third represent $250 million or less.


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