1Q22 Reports from Investment Bankers Include Insights on Temporary Slowdown in Deals, Wealthtech Predictions, Surge in Sub-Billion Sellers
Both firms’ respective reports noted a slight decrease in activity in the first quarter, and predictions that the slowdown will prove only temporary, despite the geopolitical and domestic uncertainties currently facing markets.
The WSR editorial team’s top three key takeaways from the first quarter ECHELON RIA M&A Deal Report are:
- Wealthtech M&A serves as an indicator of prominent trends, including tech-enabled product distribution, services for mass affluent investors and cryptocurrency capabilities.
- Breaking down acquirer types, the strategic & consolidator acquirers rose to a dominant 55% among a field of acquirer types including banks, RIAs, private equity, insurance and independent broker-dealers.
- Direct investment by private equity in the largest wealth management firms fell, likely due to saturation at the top of the market, a saturation ECHELON points out may be transitory as new private firms enter the space weekly.
The first quarter DeVoe & Company RIA Dealbook was also replete with significant insights, including the following top three from the WSR editorial team’s perspective:
- Noting the same trend on consolidators increasing market share, DeVoe states that RIA buyers show a downtrend since 2018, in part due to many RIA buyers becoming consolidators. Bank acquirers slowed to a halt in the first quarter.
- Average assets under management per deal declined as sellers in the mid-size range between $501 million and $1 billion increased while sellers with over $1 billion in assets decreased.
- In addressing the first quarter slowdown, DeVoe stated that “the more likely scenario is that this slowdown is an illusion created by temporary marketing decisions. Celebrating signed deals during a global crisis is not the best PR move.”
We’ve done the heavy reading so you don’t have to, but both the ECHELON and DeVoe reports are well worth reading in detail for industry participants seeking thoughtful insights on the current state of play for the RIA M&A market.
Julius Buchanan, Senior Contributing Editor at Wealth Solutions Report, can be reached at firstname.lastname@example.org