After a busy period, some of the momentum in the North American mergers and acquisitions space slowed in the first three months of this year. Volatile markets – shaken by rising inflation and the war in Ukraine – dampened wealth management tie-ups.

The pace of dealmaking in the North American wealth management industry slackened in the first three months of 2022, with economic and market volatility creating headwinds for deals. However, levels remained well above historic averages, according to ECHELON Partners, the boutique US investment bank.

There were 94 deals announced in the first quarter, down from a record-setting fourth quarter of 2021 but still more than 20 per cent above the next highest quarter, 3Q21.

Strategic buyers and consolidator firms were still busy in the space, while private equity organizations were important players, the firm said in its regular overview of M&A trends.

A total of 94 transactions were announced in the first three months of this year, and 338 deals are expected to go ahead this year, ECHELON Partners said. 

“Given the number of buyers active in the space and new entrants arriving, we expect M&A volumes to continue near trend levels unless macro conditions deteriorate dramatically from here,” the firm said.

A desire to achieve economies of scale to cope with mounting regulation and client demands, and increased technology is encouraging some firms to expand via M&A. Other businesses are selling because they cannot afford to grow beyond their current position, or because owners want to retire, for example. The oft-repeated statement about multi-trillion transfers of wealth has also attracted investors thinking that the wealth sector remains a strong growth market.

Among other details, ECHELON noted that last year, the average asset under management per transaction increased at its lowest year-over-year rate since 2018. This trend became more extreme in the first three months of this year. Even so, the average AuM size in Q1 2022 was still 16.4 per cent higher than the average for 2020. In total there were 36 deals involving over $1 billion in AuM in the latest quarter.

Buyers and sellers in Q1 2022 who made news include CAPTRUST and Portfolio Evalutions; UBS and its purchase of robo-advisor firm Wealtfront; Baird’s purchase of Hefren-Tillotson; and CI Financial’s purchase of Eaton Vance WaterOak.

One of the most vigorous M&A players since the start of 2020 has been Canada-based CI Financial, buying a raft of US wealth management businesses. The firm now wants to float its US businesses on the stock market – a move analyzed by this news service.