A new industry report finds upticks in both the number and average deal size of merger and acquisition activity among registered investment advisor (RIA) firms.
According to the latest data compiled by Schwab Advisor Services, total and average deal size rose during the first six months of 2015. The first half of this year closed with 37 completed transactions, up from 29 during the same period in 2014. Total transaction value increased 53%, to $49.8 billion in assets under management (AUM), a jump from $32.6 billion during the first half of 2014.
Average deal size reached $1.3 billion in AUM. This marked the highest average deal value since 2009, when the average transaction size for the entire year was $1.7 billion in AUM.
The types of buyers involved in deals during the first half of 2015 remained consistent with previous periods, with strategic acquiring firms (SAFs) and RIAs accounting for the buyer in 79% of all deals. Forty-three percent of transactions were led by SAFs and 38% were closed by RIAs.
Results from Schwab’s 2015 Benchmarking Study indicate that independent RIA firms have experienced 5 consecutive years of strong performance. Nearly half (42%) of firms have doubled their revenues and half have increased their AUM by 75% since 2009, according to the report. Investor demand was a significant contributor to growth last year, with top-performing firms seeing an increase in new clients of 10% or more and increasing their share of wallet with existing clients by 4%.
Schwab’s data reflects transactions involving primarily high net worth and endowment focused RIAs with assets under management exceeding $50 million. The data also includes advisors-in-transition who joined an existing RIA and received equity consideration.
