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Another Quarter, Another Record High for M&A Dealmaking

Industry Trends and Research

Wealth management M&A activity reached a new quarterly high in the second quarter of 2019, and could be on pace for another record year. 

ECHELON’s M&A Deal Tracker report shows that there were 52 transactions recorded during the second quarter of 2019, surpassing the previous quarterly high of 49 set earlier this year. If the market keeps up its current pace, there could be more than 200 transactions by year-end, which would be the seventh straight record-breaking year for the wealth management industry, the report observes.

According to ECHELON, the steady increase of M&A within the RIA community is on a “multi-year bull trend that is showing no signs of weakening.” The firm notes that this quarter’s activity was driven by mid-size RIAs with assets between $300 million and $1 billion that are “using inorganic growth strategies to realize operational efficiencies, achieve scale and free up capital to invest in technology and talent.” 

M&A Impact

In fact, the report notes that the second-quarter deal count has grown at a faster rate when compared to the growth of the annual deal total since 2015, with second-quarter deals increasing at a compounded rate of 17% and annual deal totals growing at 13%. Additionally, the second quarter for 2019 was 58% higher than the second-quarter average of 33 transactions (2013 to 2019) and 50% higher than the quarterly average of 35 transactions. What’s more, the report observes that dealmakers continued their heightened activity despite volatility in capital markets during the quarter. 

The second quarter saw the two of the largest wealth management M&A transactions – as measured by AUM transitioned – since the firm began tracking this data. Average AUM per deal, however, has decreased year-over-year by 17%, but remains above $1 billion in AUM, indicating that activity is being driven by smaller transactions. 


RIA-to-RIA deals dominate the lower AUM part of the market, but ECHELON is also seeing a greater volume of small- to mid-sized transactions. These are being completed by firms in the Strategic and Consolidators segment which have built “robust platforms” that have moved lower in the AUM spectrum as deal competition has increased, the report notes. 

ECHELON further observes that 2018 saw a total of 49 RIA-to-RIA acquisitions, and 2019 is projected to exceed that number by 45% with 71 expected acquisitions. As of the second quarter of 2019, RIA-to-RIA transactions make up 35% of the segment’s deals, placing the category at a similar level to the position it held in 2016. And while the Strategic and Consolidators segment has led M&A activity since 2016, the report observes that 2019 could be the year of shifting buyer patterns in the wealth management market.

Top Transactions

During the second quarter of 2019, there were 15 deals of $1 billion or greater, the report notes. The largest was Principal Financial Group’s acquisition of Wells Fargo & Company’s Retirement & Trust business of $827 billion in AUM for a reported $1.2 billion down payment and earnout of up to $150 million. This deal created one of the nation’s largest retirement services companies with 7.5 million customers. 

ECHELON further observes that Reverence Capital’s purchase of Advisor Group from Lightyear Capital, PSP Investments and other investors was the largest deal by purchase price, at $2.3 billion for a 75% stake in the company. Advisor Group and its subsidiaries are likely to be “more acquisitive with the fresh infusion of capital,” ECHELON suggests. Another blockbuster deal included United Capital selling their $25 billion in AUM to Goldman Sachs.

As of the end of the quarter, the most active year-to-date dealmakers were Focus Financial (16), Mariner Wealth Advisors (6), CAPTRUST Financial Advisors (5) and Mercer Advisors (4). 

Breakaway Activity

Despite an unexpected dip in breakaway activity during the first quarter, ECHELON notes that the second quarter data presents a “v-shaped recovery.” The second quarter saw a record 192 breakaways, the most of any quarter since ECHELON began recording the data and more than double the first quarter. 

What’s more, the second quarter’s rebound puts 2019 on pace for a record 572 breakaways – 6.5% higher than 2018, the next highest year, the firm notes. The number of wealth management M&A deals and breakaways with $1 billion or more in AUM is projected to reach 58 this year, an increase of 21% from 2018. ECHELON suggests that the first-quarter data appears to be an anomaly that is likely “due to new retention programs and a shaken advisor community” from 2018’s fourth-quarter market downturn. 

The second quarter’s rebound “indicates that major breakaway drivers including an aging advisor demographic, desire for liquidity, aging business cycle and wide availability of financing programs continue to outweigh factors that tend to lead to a reduction in breakaways,” the report explains. 

The so-called breakaway leaderboard was headed by two mega-breakaways resulting in an expected $17 billion of assets leaving First Republic’s private bank – reducing the bank’s AUM by 12%. ECHELON notes that the breakaways will create two large California-based RIAs with two partners forming Evoke Wealth and the other three partners starting IEQ Capital.