RIAs have continued to be the most active buyers of other RIAs in the first half of 2017, and they’re increasing their market share, according to a report released last week by Charles Schwab.

Forty-three percent of firms conducting RIA mergers and acquisitions are RIAs themselves, according to the report.

“When we talk to advisors, they tend to prefer like-minded buyers,” says Jon Beatty, senior vice president for sales and relationship management at Schwab Advisor Services.  “RIAs are seeking buyers who have walked in their shoes, that appreciate the entrepreneurial spirit and fierce independence of independent firms.”

RIAs were also the leading acquirers of other RIAs in the first half of 2016, when they made up 35 percent of buyers.

Strategic acquirers such as Hightower and Focus Financial Partners have become the second most prominent buyers of RIAs, accounting for 35 percent of the transactions in the first half of 2017, up from 31 percent in the first half of 2016.

A total of $59 billion in AUM was acquired in the first half of 2017, down from $75 billion last year, with deal sizes ranging from $77 million to $17 billion, according to the report. In the first half of this year, Schwab recorded an average deal size of $1.1 billion, down from $1.4 billion in the first half of 2016.

“We think this is an anomaly in the numbers mostly driven by an outsized number of mid-to-smaller deals in the first quarter of this year compared to the first quarter of 2016,” says Beatty. “These numbers snapped back in the second quarter and are back on trend.”

According to Schwab, 52 RIA mergers and acquisitions occurred during the first half of 2017, keeping pace with the first half of 2016, during which 52 deals also occurred.

M&A activity should continue at a rate similar to last year's pace, says Beatty. “As long as M&A activity is based on the desire for positive outcomes that move the business forward, the desire for strategic growth and scale will be catalysts for continued increases in the number of transactions,” he says.

In the first quarter of 2017, 32 transactions took place, compared to 20 in the second quarter. Beatty says that it is typical for the first quarter of a year to see more transactions.

First « 1 2 » Next