Approximately 43 RIA M&A transactions were completed during the third quarter, suggesting 183 total deals will be consummated in full-year 2018, according to ECHELON Partners’ Third Quarter 2018 RIA M&A Deal Report.
RIA transactions in the third quarter were 30 percent higher than the third-quarter average since 2013, resulting in the highest third quarter of RIA M&A transactions since ECHELON began tracking this data.
In addition, third-quarter breakaway activity soared to 139 departures, marking the second-highest total since 2013 and a 13 percent increase from the previous quarter’s 123 breakaways.
ECHELON believes the increase in breakaway activity will persist over the coming months as advisers actively seek independence and liquidity amidst an aging business cycle. The increased occurrence of large, successful $1 billion-plus breakaways has reinforced adviser confidence. The third quarter’s 139 breakaways was 30 percent above the historic average of 107 quarterly breakaways over the past 20 quarters.
Additional and expanded findings from the Deal Report include:
- Average deal size is on pace to exceed $1.5 billion for the first time, a 55 percent increase over 2017’s average deal size.
- In search of growth platforms and scale, well-capitalized, strategic buyers and consolidators accounted for 53 percent of RIA purchases during third quarter 2018, consummating 23 deals.
- Projected $1 billion assets under management wealth manager M&A remains on pace to surpass the five-year average of 20 transactions by approximately 30 percent in 2018 — with 26 wealth manager M&A transactions — as buyers seek out these attractive lower-risk platforms.