Mega RIA firm M&A activity leads to record third quarter

The 64 transactions from July to September make 2021 a record year for deals, and more than half involved sales of firms with $1 billion or more in assets.

The 64 ownership transactions involving registered investment advisory firms that took place during the third quarter set new quarterly and annual records, according to DeVoe & Co.

“With 165 transactions through the first three quarters, the industry has surpassed the annual record of 159 transactions set last year,” the company said in its quarterly deal book report. “With this new highwater mark, 2021 is officially the eighth successive record year of RIA M&A activity.”

More than half of the transactions in the third quarter involved sales of firms that have $1 billion or more in assets under management, a sizable uptick from the historic average of 30%, DeVoe said. The share jumped to 38% in 2020 and held steady through the first half of 2021.

Within the group of largest firms, sellers of $5 billion or more in size have been unusually active, DeVoe said.

“Private equity is accelerating its investment in the RIA space and typically wants to acquire firms of scale,” according to the report. “The 11 transactions by $5 billion-plus firms in the quarter is an all-time high for the industry, and the 20 year-to-date are nearly double the historic average. The $5 billion-plus sellers represent 17% of all transactions in Q3, nearly double the share reached in Q1 and Q2.”

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