Where will RIA buying be strongest in the next year?

A businessman is consulting a crystal ball to foretell the future.

Inaugural M&A research reveals which wealth firm segment looks sweetest for dealmakers, aggregators, lenders, and consultants.

Gladstone Group, a notable entity in the financial services sector focusing on mergers and acquisitions, strategic growth consulting, and executive search, has come out with new forward-looking research on trends in the M&A space.

The firm revealed its inaugural research report, The Gladstone Prognosticator, during its recent annual RIA M&A Conference.

“Research that analyzes past mergers and acquisitions is a history lesson,” Dan Kreuter, founder and CEO of Gladstone Group, said in a statement. “Advisors armed with knowledge of what acquirers intend to do have a competitive advantage.”

The first edition of the report took responses from a rich cross-section of M&A deal participants, surveying more than 100 leading aggregators, deal attorneys, lenders, and industry consultants, offering a comprehensive look at RIA M&A trends.

According to the findings, wealth advisory firms managing assets between $500 million and $1 billion are poised to be the prime targets for acquisitions over the next year, with 97 percent of buyers showing a strong interest in this segment.

The $100 million to $500 million range follows as the second most sought-after sector, with roughly three-quarters (73 percent) of poll respondents keeping an eye on that space.

The research also revealed a shift in sentiment toward hybrid business models in the industry, which blend fee-based and commission-based services.

While 47 percent of buyers are not interested in the hybrid model, a 53 percent majority are at least somewhat keen, including 30 percent who fully embrace it and 23 percent who’d demand that new business be exclusively fee-based and not involve commissions.

“Our study dives deep into crucial aspects of the RIA M&A industry, including transaction volume, leverage and equity preferences, and deal terms, empowering firms to make informed decisions about their future whether they’re interested in buying, selling or growing,” added Derek Bruton, senior managing director at Gladstone Group.