The most active RIA acquirers in 2023 were Wealth Enhancement Group, Mercer Advisors, CAPTRUST, Savant Capital Management and Creative Planning, according to Echelon’s 2023 RIA M&A Deal Report.
The largest RIA acquisition was Osaic’s purchase of Lincoln Financial Group’s wealth management business, which landed in fifth place on the Top 10 list, a summary of the report released today said.
The three biggest transactions last year were The Carlyle Group's investment in CAPTRUST, Genstar Capital’s acquisition of Cetera Financial Group, and Clayton, Dublier & Rice’s purchase of Focus Financial Partners.
RIAs were involved in 228 transactions representing $466 billion in AUM. Excluding the deals involving more than $20 billion in assets, the average assets per deal grew to $1.668 billion in 2023 billion from $1.605 billion in 2022.
“RIAs, especially the subset of private-equity backed players that run programmatic acquisition campaigns, continue to be the most active acquirers in the industry,” the summary said.
Deal activity in the RIA sector remained robust last year, marking a “new dealmaking era for wealth management,” according to the summary.
In 2023, there were 321 announced deals, just 5.9% off the 2022 record high of 340, according to a summary of the report released today. And while the year started on a bit of a slide, deal activity ended strong in the last two quarters, with 86 deals completed in the third quarter and 95 in the fourth quarter.
Despite higher financing costs, "the wealth management industry has remained resilient due to factors such as fierce buyer competition, business model resiliency (wealth managers are tasked with protecting clients in times such as this), and demographic tailwinds,” the summary stated.
Even though the number of deals declined slightly, the average assets per transaction grew by 3.9% over 2022, partially due to a slew of $10 billion to $20 billion transactions, the report said.
Private equity firms turned to creativity in deal structuring to deploy their capital, the summary said.
“Structured minority investments, with features such as paid-in-kind and preferred distribution rights, have become more popular with buyers seeking to pursue deals in an environment that has seen LBOs more difficult to complete,” the summary stated. “Minority investments have grown at a 45% annual rate since 2019.”
Financial sponsors were involved in 61.1% of last year’s transactions, with 27 of those deals being direct investments involving some $2.4 trillion in advisory assets under management, according to the summary.