Private Equity Generates Another Record Quarter for RIA M&A
Consolidation in the wealth management industry continues to break quarterly records and is now on track for 287 deals this year, according to the latest Echelon Partners report.
The 78 deals announced in the three-month period to September compare to 55 deals in the same quarter in 2020, and are up from 54 deals in the second quarter of this year.
The 208 deals so far this year have already surpassed last year’s record 205 deals, making 2021 the ninth consecutive year of record consolidation among registered investment advisory firms.
Not only are there more offers, but the size of the offers is also increasing. In the first nine months of 2021, the average assets under management of target companies was $ 2.3 billion, compared to $ 1.7 billion for 2020 as a whole. In 2017, average assets under management of target companies was just over $ 1 billion.
As explained in the Echelon report, the growth in average assets under management is also in part due to increased returns on investments. The S&P 500 Index is up 18.3% this year through Friday, which matches the performance of 2020, and compares to a 31.2% gain in 2019.
The Echelon report predicts that 2021 will end with 136 deals involving companies managing over $ 1 billion, up from 78 of those deals in 2020, and just 29 in 2017.
Private equity investors continue to be a major factor in the pace of consolidation, including 12 direct deals in the third quarter. But most of the EP’s influence is manifested in the form of EP-backed consolidators like Mariner Wealth and Mercer Advisors aggressively buying out wealth management companies.
Some of the significant PE deals during the quarter included Blackstone taking an 8% stake in AIG Life and Retirement, Onex buying a minority stake in Wealth Enhancement Group, Bain Capital buying part of Carson Group, and Merchant Investment Management buying a stake in Advisors. simultaneous.
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