The coronavirus might have brought the world to a screeching halt in March, weighing down on mergers in the advisor space, among other things. But after an anemic start for the second quarter, M&A activity jolted back to life in June—so much so that the month set a record for M&A deals among registered investment advisors and broker-dealers, according to a Fidelity report.

According to “Fidelity’s Quarterly M&A Review,” there were only 21 deals in the second quarter—but 14 of those closed in June. The deals measured in AUM for the month totaled $20.6 billion.

“It’s the second highest number of deals in a month and the fifth largest monthly AUM since we started tracking [in 2016],” said Scott Slater, M&A specialist and Fidelity Institutional VP of practice management and consulting, in an interview with Financial Advisor today.

“June’s 14 deals represent four times more assets than the 10 deals completed throughout March, April and May,” the report said. Those transactions averaged $1.5 billion in assets under management, “and restored the momentum kicked off in January and February, when there was an average of 10 transactions and $1.4 billion AUM per month. The return of larger and more frequent deals signals the revitalization and potential acceleration of an already full M&A pipeline.”

January and February had seen RIA and broker-dealer merger activity start fast out of the gate; there were 13 deals totaling $18.9 billion in assets in January and seven deals totaling $9.9 billion assets in February. The asset levels represented a 158% increase over the first two months of 2019.

The big question is whether the coronavirus caused only a momentary blip in the trend of merger activity, which has been increasing for a number of reasons. A population of graying advisors are seeking succession plans and thinking of cashing out. Larger firms are switching to inorganic growth and seeking scale. A rising stock market has made firms more valuable, which means advisors looking toward the door think now is the time to sell.

With the market so hot, valuations have been hot as well, and many of them were ballooning with the rising stock market through the end of last year. Fidelity did a survey of serial acquirers in 2019, finding that the valuation had gone up to a median of seven times EBITDA multiple for deals since 2017, up from five times EBITDA five years before. Several observers have augured that the coronavirus and the shutdown of the economy would likely poke a hole in those valuations and let the air out, but the rebound in merger activity might firm up the marketplace.

“Both Orion Advisor Solutions’ purchase of $24.5B Brinker Capital and the acquisition of Personal Capital by Empower Retirement are further evidence that the fast-paced M&A market, influenced heavily by strategic and serial acquirers, will return. Aided by a low interest rate environment, M&A’s swift revival highlights the ubiquitous nature of its driving forces: substantial private capital, succession pressure, and the demand for improved platforms, scale, and talent,” the Fidelity report said.

A few firms were quite busy through the pandemic, says Fidelity, including Creative Planning, which completed four deals; CAPTRUST and Mercer, which finished three; and Focus Financial Partners, Dynasty and Frontier Wealth, which each completed two, according to Fidelity’s report.

Creative Planning, with a reported $50 billion in assets, only entered the merger fray in 2019, but has become aggressive in that regard and sold a minority stake to General Atlantic to help it with strategic growth. The firm also reportedly made four strategic acquisitions in 2020, and it says that it has a fifth lined up beyond the four that closed in the first half. (This year, its first purchase was Stratford Consulting in Addison, Texas with $618 million under management.)

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