The top reason so many firms are looking at acquisitions is to bring new talent in. “People are the lifeblood of RIAs, so it is no surprise that this is part of the rationale for acquisitions,” the firm said. Three-fourths of advisors said taking in new talent was a primary driver for acquiring other firms. Increasing the number of clients and assets coming into the firms was a strong second-place driver.

Apparently, the phones of prospective sellers have been ringing off the hook with offers. “Many RIA owners who may not even be considering an external sale are likely inundated and possibly fatigued by calls from suitors,” the report noted. Sixty-two percent of advisors indicated that the number of inquiries they receive related to selling or merging has increased either somewhat (noted by 30%) or significantly (cited by 32%) over previous years, and more than one-third of advisors are receiving 10 or more inquiries in a year.

Achieving scale to help spur success remains a top reason for firms to sell. Forty-four percent of firms said that was the primary reason for selling externally. The increasing complexity of technology, compliance and operations has made it more difficult for smaller firms to compete, DeVoe noted.

However, the reasons for selling also vary by firm size. Smaller firms with less than $500 million in assets under management said the top two motivators to sell were to achieve operations scale and to offer a concrete succession plan. Firms in the middle range with $500 million to $3 billion in AUM said they were looking for liquidity and succession planning through a sale. Larger firms with more than $3 billion in AUM said continued growth and the desire to scale up their operations were the prime reasons for selling.

Mike LaMena, CEO of Wealthspire Advisors, a financial planning firm based in New York City, said during a recent DeVoe M&A+ Succession Summit, “Deals beget deals. When RIA leaders see others selling, it causes many to reflect on their situation.”

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