Despite a tiny dip in RIA mergers and acquisitions for the third quarter, the advisory industry is on pace to deliver a strong fourth quarter that could put 2024 in the top two spots for annual activity, according to Echelon Partners’ third-quarter deal report.

From July through September, 74 deals were announced, just one below last year’s 75 deals for the same time period, the report said. Those deals represented $6.7 trillion of client assets under management, and the average AUM per deal is now $1.965 billion.

With 330 deals projected for 2024, that would put this year's activity level in second place after 2022’s record 341 deals.

So far this year, the most active acquirors have been most strategic buyers: Wealth Enhancement Group has announced 11 deals; MAI Capital Management has announced six deals; Constellation Wealth Capital (the only financial acquiror in the top seven) five deals; Waverly Advisors five, Allworth Financial five, Carson Wealth five and Mariner Wealth Advisors four.

Strategic acquirers, most of which are RIAs, continued to dominate deal activity in the advisory industry, representing 85.1% of deals in the third quarter, the report said. Financial acquirors made up the other 14.9%. 

Private equity capital, whether through a direct investment or through backing the acquisition of a strategic acquiror, continues to be a driving force in 2024’s M&A story, and G.P.s and their funds have had a hand in 64.3% of deals year-to-date, the report said.

Of the 74 deals last quarter, 33 were for firms with more than $1 billion in AUM, and there were five that were greater than $20 billion, the report said. Those included $375 billion AUM Creative Planning’s minority sale to TPG Capital, as well as Janney Montgomery Scott, with $150 billion in AUM, and its sale to KKR.

“The number of transactions involving at least $1 [billion] in assets is expected to rise by 12.1% in 2024E relative to 2023,” the report said. “ECHELON anticipates sustained buyer interest in these larger firms due to their established brand and at scale advisor teams. In addition to their stability, they offer strategic value as hubs for top acquirers aiming to expand into new markets, making them particularly appealing acquisition targets.”

“WealthTech” acquisitions surged last quarter, the report found, with more than 50 deals announced involving strategic acquirors and private equity firms looking to bring improved technology solutions to advisors and clients. Areas that saw a lot of action were financial and retirement planning, risk/compliance, and CRM/marketing and business development.

Wealth.com was bought by Google Ventures and others, Acher by BNY Mellon, Vanilla by Edward Jones VC, Savvy Wealth by Canvas Ventures, GeoWealth and Preqin by BlackRock, Envestnet by Bain Capital and others, Earned Wealth by Summit Partners, and Canoe Intelligence by Goldman Sachs.