DeVoe Report: M&A Reaches New Heights Despite Headwinds

James Miller, Contributing Editor & Research Analyst, Wealth Solutions Report

Four Quarters in a Row With Over 60 Transactions, Sellers Earning a Premium to Valuations, Consolidators Buy Most While Small RIAs Sell Most and a Record 2022 Expected While Velocity Slows

In its recently released RIA Deal Report for the second quarter of 2022, DeVoe & Company reveals that the M&A markets are surging forward despite economic challenges, geopolitical issues and declining equity markets. 

The firm concluded that “M&A continues its hot streak” as it revealed pivotal numbers for the second quarter, which saw 66 transactions, a 53% increase from 2Q21, and 133 transactions for the first half of 2022, 30% higher than the previously record-setting 1H21. 

M&A on a hot streak!

Transaction volume has exceeded 60 transactions per quarter for the past four quarters, doubling the average rate of 2019. 

Drivers of M&A Growth

“The industry’s steady movement toward professional management, as well as negotiations already in process, potentially contributed to continued momentum,” the report states.

Clinging to peak valuations?

Some of these transactions may be driven by sellers who believe that valuations have peaked, remembering that it took 12 years for valuations to fully recover after the 2008 financial crisis, but the firm points out that “RIAs that can demonstrate true organic growth are in a stronger position to sell or merge, and they can still command elevated valuations.”

According to Brad Grubb, a Managing Director at the firm, “RIAs that can demonstrate sustainable, above-average organic growth will continue to earn a premium to their valuations.”

Francine Miltenberger, also a Managing Director, adds, “Private equity firms in aggregate have huge reservoirs of dry powder – uninvested cash that isn’t making money for them unless invested.”

Consolidators Dominating the Field

DeVoe & Company divides buyers into consolidators, banks, RIAs and others, with consolidators described as “companies whose business models are predicated on making RIA acquisitions.” With 71 transactions completed in the first half of 2022, consolidators accounted for 53% of all transactions.

At the same time, transactions by RIA buyers declined to 21% in 1H22, half of the volume of three years prior. Consolidators have taken their place, and many of the former RIA buyers have become consolidators. 

The report also noted an increased trend in the number of adjacent-space buyers entering the RIA M&A market, such as insurance, financial and HR consulting firm OneDigital and insurance and financial services firm Alera.

Small RIAs, Big Business

Small ($100 million to $500 million) and mid-size ($501 million to $1 billion) sellers have demonstrated an aggressive 46% growth pace year-over-year, with the combined categories rising from 63 transactions in 1H21 to 92 in 1H22.

DeVoe explains that average seller size moves down from the mega-sized firms (over $5 billion) through the large RIAs (from $1 to $5 billion), then through medium and small firms in a repeating cycle, and we are now at the end of the pattern, with the surge in small firms. 

“It’s a pattern that has repeated several times over the last two decades as a given firm, contemplating a sale, gains greater conviction when they see their larger peers doing so.”

Sub-Acquisitions Breaking Records

DeVoe identifies sub-acquisitions as “acquisitions executed by firms that were acquired by RIAs or Consolidators themselves.” The firm explains that “affiliates often use the parent company’s capital and/or M&A expertise to support their own inorganic growth.”

Sub-acquisitions rose quickly from 2017 through 2020 but slowed during the pandemic. “When COVID hit, they dropped significantly as their parents concentrated on larger deals and affiliate sweet-spot targets were focused on supporting their clients through the pandemic.”

After the pandemic, sub-acquisitions have returned, posting rapid growth from 10 transactions in 1H21 to 27 in 1H22.

The surge in sub-acquisitions also partially explains the move towards smaller sellers, as “[t]he average size of sub-acquisitions is roughly half the size of other transactions, contributing to the downshift in the overall average seller size in the first half of 2022 discussed earlier.”

DeVoe’s Predictions

Although M&A has continued at a breathtaking pace for multiple quarters, the firm predicts that the headwinds of economy and geopolitics might finally catch up with the pace of M&A, causing a slowdown for one to two quarters.

Despite this, the company predicts that 2022 will set records, but amid an overall decrease in velocity, predicting that the 40% year-on-year growth of 2020 and the 50% growth of 2021 will moderate to 20-30% for 2022, which the report states will be a “‘healthier’ trajectory for optimal M&A.”

James Miller, Contributing Editor & Research Analyst at Wealth Solutions Report, can be reached at

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