Included in the third-quarter transactions were several large deals.
“Mega deals involving significant brand-name firms signal keen interest in the RIA space and additional consolidation on the horizon,” the report said. “Serial acquirers like United Capital, Mercer Advisors and Wealth Enhancement Group capitalized on the high valuations, while Charles Schwab took an opportunity to add scale to its wealth management enterprise.”
“United Capital’s sale to Goldman Sachs was an important flashpoint in the industry and served as proof of concept for the private equity-backed consolidator model.” the report added. “Drafting off this momentum, two more of the leading consolidators replenished their capital reserves. In mid-September, $16.5 billion Mercer Advisors announced a recapitalization whereby Oak Hill Capital will acquire an equity stake in the company from private equity owners Genstar Capital and Lovell Minnick Partners.”
The report continued, “private equity deals typically bring more than capital to the table. Each private equity firm has its own set of unique strengths and expertise.”
The high volume of mergers and acquisitions will continue for the next five to eight years, the report predicted.
“The options have never been so plentiful. Valuations have never been so high. The buyer pool has never had so many options that truly contribute to helping a seller run a better business,” the report said.
DeVoe & Company offered advice for potential sellers.
“Evaluate your options and move forward with conviction. A broad set of options can often lead to a lack of decision. And lack of a decision in the near term will typically lead to fewer options over the mid term, and ultimately [led to] a forced decision,” the report said.