ECHELON Report: Huge Acquirers Show Appetite In Record-Breaking Year

Chris Latham, Deputy Managing Editor, Wealth Solutions Report

2022 On Track For Most M&A Deals Ever, Fueled By Private Equity-Backed Strategics And Consolidators, But Growth Subsided, According To ECHELON

The ECHELON Partners third quarter report on the state of mergers and acquisitions in the RIA space is broadly in line with the recently published report from DeVoe & Company. ECHELON reveals that deal volume is on track to reach another annual record despite slowing deal flow, while strategic acquirers, consolidations, private equity firms and wealthtech players continue to make big moves. Here are the top four points from ECHELON’s 3Q22 RIA M&A Deal Report.

1. Overall Q3 had 84 wealth management transactions, compared with the 91 deals in Q2 and 94 deals in Q1. In Q4 2021, 99 transactions occurred after quarterly deal volume trended upward in 2020 and 2021. During the first three quarters of 2022, firms conducted 269 transactions, 7.7% higher than the same time period last year, and 368 deals in the previous 12 months, the strongest yearlong period since tracking began, according to ECHELON. 

2. Private equity and insurance firms are expected to make direct investments that account for less than 26% of total deal volume in full year 2022, ECHELON found. Strategic acquirers and consolidators accounted for 114 deals during the first three quarters of 2022, or 42% of the total. However, most strategics and consolidators are themselves backed by private equity firms. In the first three quarters of 2022, 71% of acquirers also bought another firm.

What goes up …

3. ECHELON reported that average AUM per M&A deal fell to $1.73 billion during the first three quarters of the year from $2.09 billion in full year 2021 and $1.75 billion in 2020. In Q3 2022, 33 deals greater than $1 billion in AUM were announced, down 35.3% from 51 such deals announced in Q3 2021. During this third quarter, 43% of deals announced were under $1 billion in AUM, and those averaged $389 million in AUM.

4. Turnkey asset management platforms (TAMPs) have conducted significant M&A deals to enhance their offerings and wealthtech startups are attracting high levels of investment capital, according to ECHELON. Major Q3 deals include Envestnet acquiring Redi2 Technologies; J.P. Morgan acquiring Global Shares; as well as Tiger Global Management, 8VC, MSD Capital and other players investing in Opto Investments.

For more information, download the full report here.


Chris Latham, Deputy Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com

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