The growth in wealth management merger and acquisition activity slowed in 2022, with the number of transactions plummeting in the fourth quarter, according to Echelon’s recent RIA M&A Deal Report U.S. Welath Management Executive Brief.
Last year was marked by slower growth in the number of RIA transactions than in previous years, the report said. There were 340 transactions last year, a 10.7% increase from 307 in 2021, but a notable drop from 2021’s 49.8% increase from 205 transactions in 2020, the report said.
The number of transactions also fell to 71 in fourth quarter 2022 from 84 in the third quarter and a peak of 99 in the fourth quarter of 2021, according to the report. From the first to the fourth quarter, deal activity declined by 24.5%, from 94 to 71 transactions.
Deal size also declined by 23.3% in 2022 to $1.61 billion from $2.09 billion in 2021, with a “significant” reduction in deals involving firms with over $1 billion in AUM, the report said.
The most active strategic acquirers as 2023 begins are backed by private equity firms, according to Echelon. In 2022, over two-thirds of all transactions (69.7%) were either direct investments from private equity or involved a buyer backed with private equity.
RIAs accounted for 43% of acquirers in 2022.
The most active acquirers by transactions in 2022 were Mercer Advisors, which acquired a total of $13.3 billion assets in 20 deals; Wealth Enhancement Group, which acquired $8.9 billion assets in 14 deals; Creative Planning, $15 billion in 13 deals; Mariner Wealth Advisors, $39.9 billion in 11 deals; and Merit Financial Advisors, $4.8 billion in 11 deals.