RIA M&A Set Another Record in 2022
2022 proved to be another record year for mergers and acquisitions (M&A) of registered investment advisors (RIAs), as big buyers snapped up strategic opportunities to expand tech capabilities and international positions, according to a report by Echelon Partners.
Close to half of deals tracked by Echelon were made by strategic acquirers and consolidators, and more than half involved private equity firms either directly or indirectly, in trends that could continue despite a slowdown in the broader M&A market.
The new record for RIA M&A volume came despite the backdrop of a global slowdown in M&A, amid surging inflation, rising interest rates, and worries about a potential recession, with global deal value tumbling 36% and volume down 12% from 2021, according to Bain & Company.
These trends could continue in 2023, but Echelon’s research suggests the view for RIA M&A is still one of growth, as some key shifts driving dealmaking in the RIA space gave way to another record year in 2022, with more promise for 2023.
While RIA M&A activity per quarter has declined since the fourth quarter of 2021, the aggregate number of deals in 2022 at 341 still outnumbered 2021’s 307. It was the 10th year in a row that RIA M&A deal volume hit new highs.
Some of the largest wealth management transactions to date also took place in 2022. However, it’s worth noting that this year’s deals have been smaller in scale on average than last year’s, with a 22.5% decline in the average AUM per deal to $1.6 Billion in 2022 compared to over $2 billion 2021.
Breaking down acquisitions by buyer type, consolidators remained the biggest acquirers, responsible for close to half or 43% of the total in 2022.
RIA-to-RIA transactions were less common, only
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