Private equity's appetite for registered investment advisor firms shows no signs of slowing, but a subtle yet powerful trend could signal a shift in focus.
Traditionally, PE funding has centered on mega-aggregators and RIAs with billions in assets under management. But in the year ended July 2025, the AUM of PE-owned RIAs declined from $2.45 billion to $2.31 billion, according to
The number of PE-backed RIAs managing less than $1 billion also rose to 81 this year, up from 62.
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This trend could
RIAs in the $500 million to $5 billion AUM range represent a compelling opportunity for private equity. These firms often embody strong growth fundamentals: loyal client bases, entrepreneurial leadership and
Unlike larger firms with more complex structures and higher multiples, middle-market RIAs can offer investors a balance — strong earnings potential without sky-high entry costs.
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Private equity's growing involvement in midsize RIAs isn't just about financial performance. As the wealth management industry
Middle-market firms frequently have enough scale to matter but lack the capital to truly professionalize operations. That's where PE firms slide right in.
The aggregator's dilemma
One possible outcome of this trend is accelerated deal activity. RIA M&A has
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For large consolidators looking to build scale through acquisitions, the stakes are high. Where once aggregators competed primarily against each other, they are now being outbid or outpaced by PE firms eager to establish or expand a footprint in wealth management.
That makes differentiation increasingly critical, as end clients care less about sheer size and more about comprehensive planning capabilities, specialized service models and personalized advice.
In an environment where organic growth alone cannot sustain strategic ambitions, many aggregators may have no choice but to pay up for firms that can fill capability gaps. Expect the most desirable midsize firms to see valuations climb accordingly.
On the other hand, more PE competition for these same firms could decrease the number of deals. Higher valuations place pressure on aggregator balance sheets, forcing firms to think hard about whether to deploy capital or wait for a more attractive window. Some may choose to pass on deals that feel overpriced in a bid to preserve funding for future opportunities.
Two-speed M&A?
The result could be a two-speed market: PE firms, flush with funds, pursue rollups of midsize RIAs, while larger aggregators tread more cautiously. This divergence might cause fewer record-breaking years in terms of deal volume but bigger price tags for the firms that transact.
No matter how the numbers play out, mega-aggregators will have to approach acquisitions differently going forward. They'll need to weigh valuations more carefully, consider alliances or minority stakes and get more innovative about integration models.
Some may pursue organic growth strategies more aggressively as a hedge against inflated deal prices. Others may shift their gaze to niche firms in areas like tax planning, estate services or alternative investments — where differentiation boosts long-term enterprise value.
In today's wealth management M&A environment, standing still isn't an option. PE's rising interest in mid-market RIAs guarantees that competition will intensify, valuations will adjust and the deal landscape will evolve. For both PE firms and aggregators, the challenge lies in navigating this reshaped terrain with a balance of discipline and ambition.
