Sharing risk
Buyers are insisting that sellers share more risk in deal structures, senior executives at the conference said and, as a result, earn-out periods are becoming longer and more important.

Buyers at the conference also complained that too many sellers were coming to market too soon and unprepared. The percentage of “high quality” sellers has dropped dramatically, according to Barton. And Bob Oros, chief executive of Hightower Advisors and Jim Dickson, CEO of Sanctuary Wealth, both said too many sellers were presenting buyers with unrealistic growth projections.

Minority deals and sub-acquisitions are on the rise, dealmakers said. According to DeVoe, sub-acquisitions are on pace for a record year, currently accounting for 20 per cent of all transactions.

Will consolidators consolidate?
Consolidators, including Mercer, Hightower, Captrust, Focus Financial and Beacon Pointe continue to dominate the market. Large private equity-backed aggregators have accounted for more than half of transactions so far this year, according to DeVoe.

Veteran industry executive Mark Tibergien, the former CEO of Pershing Advisor Services who now heads his own consulting firm, predicted that “the consolidators will start consolidating – it has to happen.”

Jon Beatty, COO for Schwab Advisor Services, said he was surprised that a “mega-merger” hasn’t happened already. “It may be too early in the cycle,” Beatty said, “but it may happen some day soon.”

When the dust settles, there will only be “a few large consolidators left standing” serving 80 per cent to 90 per cent of the market, according to Barton.

Rose colored glasses
As for the surfeit of optimism among RIAs and M&A dealmakers, a recent DeVoe & Co survey found that three-quarters of advisory firms thought that deal volume would either hold steady or rise over the next year.

"Let’s see how long that lasts," industry veteran Corey Kupfer, who heads an eponymous law firm specializing in RIA M&A deals, said in an interview with Family Wealth Report.

“I was surprised that the impact of the Fed and the market hasn’t had a greater impact on deal volume or valuations,” Kupfer said. “I think this latest interest rate raise may have been baked into expectations. But I will be watching to see what the reaction is if things don’t cool down and there is another significant rate hike later on. I can’t image that wouldn’t have an impact on the M&A market.”