Following a rush of RIA M&A activity in the last half of 2020, which led to another record-setting year, and a surge of activity at the start of 2021, deal making apparently simmered down a bit during February.
According to Fidelity’s February 2021 Wealth Management M&A Transactions Report, there were seven RIA deals totaling $13.7 billion in asset under management (AUM), including five deals that involved sellers with more than $1 billion in AUM.
Since the start of 2021 (not including March), there have already been 31 RIA deals representing $61.7 billion in client assets during 2021. By comparison, these totals surpass the 20 transactions and $28.8 billion during the same period in 2020, which was considered a rapid pace of transaction activity at the time, Fidelity notes.
“After months of record-breaking M&A activity in the RIA market, deal making slowed for the first time in February,” observes Scott Slater, Fidelity Institutional Vice President of Practice Management & Consulting. “However, the size of deals continues to be significant, and since the start of 2021, there have been 12 $1 billion-plus transactions totaling more than $53 billion, pointing to the continued impact of capital, succession planning and movement to strong operating and client experience platforms.”
Serial acquirers Focus Financial brought on a new $5 billion partner firm with the addition of Prairie Capital Management and completed a $1 billion-plus sub-acquisition, with the purchase of Matheys Lane Capital Management. In addition, CAPTRUST and Cerity Partners each completed $1 billion-plus transactions.
Meanwhile, Independent Broker-Dealer (IBD) activity picked up in 2021 after a quiet 2020. Year-to-date, there have been four transactions totaling $65 billion. For comparison, there were five deals totaling $72.5 billion in all of 2020, the report notes. The big one, of course, was Cetera announcing its acquisition of the independent financial planning channel of Voya Financial Advisors in a $40 billion deal.
Fidelity also recently issued an updated list of the RIA wealth managers with at least $1 billion in AUM. As of Dec. 31, 2020, there were 749 RIAs with $1 billion in AUM, up 17% from 2019. Additionally, 30 RIAs from Fidelity’s 2019 $1 billion-plus list have since been integrated into another $1 billion-plus RIA.
In fact, Hightower Advisors acquired nine $1 billion-plus RIAs over the past two years, and five newly minted $1 billion-plus firms crossed that threshold via merger or acquisition, Fidelity notes.
