Record first half for RIA deal volume

Merger-and-acquisition volume among RIA firms continues to run at a record pace.
The first half of the year was the strongest on record in terms of deal volume, with 40 completed deals involving registered investment advisory firms, representing $30 billion in assets under management, according to the Charles Schwab Corp. The average deal size was $771 million.
That’s a record number of transactions for the first half of a year, but the size of the average deal is smaller than in years past, said David DeVoe, managing director of strategic development at Schwab Advisor Services. “The average seller is about half the size” of firms sold in 2008 and 2009, he said.
Since 2003, when Schwab began tracking M&A activity, transactions have been evenly divided between firms with less than $250 million in assets, those with $250 million to $1 billion and those with more than $1 billion.
This year, however, 53% of transactions involved firms with less than $250 million, Mr. DeVoe said. Smaller advisers have become more sophisticated about the need to make strategic acquisitions, he said. And by getting larger, advisory firms hope to achieve economies of scale, improve client services and better plan for ownership succession.
RIAs buying other registered investment advisory firms accounted for 54% of transactions year to date, and consolidator firms were buyers 29% of the time.
M&A activity increased steadily from 2004 to 2008, when it peaked with 88 deals involving client assets of $137 billion.