The forces at work driving consolidation in the RIA industry appear to hold steady, as does the interest of private equity firms in buying into the space, although interest rate levels have imposed discipline, a report says.

There were 61 merger and acquisition deals involving RIAs in the second quarter of this year, ensuring that transactions held around this level as they have for the past 12 months, DeVoe & Company said this week.

The firm said that for nearly three years, the number of quarterly transactions has consistently hovered around 65. 

“While this volume continues to outpace any quarter prior to 2022, M&A activity in the RIA industry has now remained on a steady plateau for an extended period of time,” Devoe & Co said. In the first six months of 2024, 126 transactions were announced – up 5 per cent compared with the same period last year. 

“Overall, 2024 is tracking toward a nominal increase in transactions relative to 2023. The lack of succession planning and the widening affordability gap for RIA next-generation leaders to buy out founders is expected to continue to drive external sales,” it said. 

Activity continues to be driven by RIAs’ need to plan for succession, growth and scale. On the buyer side, established acquirers are being joined by new entrants, and both are typically backed by private equity. 

Rises in interest rates in the past two years continue to impose tighter discipline on firms considering, and carrying out, deals.

Family Wealth Report US correspondent Charles Paikert has scrutinized figures about the “winners and losers” of the M&A arena for the first half of the year. The article also delves into the sums paid, on average, to buy firms, and how this is changing.

Trends
DeVoe said there has been a proliferation of new buyers in the RIA space. Eighty-three buyers announced transactions in the first two quarters of 2024, a 26 per cent rise from the first half of 2023.

Almost three-quarters of all transactions completed this year involved firms backed by private equity. An offshoot of private equity is the momentum of sub-acquisitions (acquisitions by firms that were previously acquired themselves), the report said. There has also been a revival of minority investments. 

“Although 2025 currently appears poised for a slow but steady increase in M&A, various market, economic or political developments could alter this trajectory,” DeVoe & Co said.