RIA M&A Activity On A Downward Slide

Michael Madden, Contributing Editor & Research Analyst, Wealth Solutions Report

DeVoe Issues Alert On Number Of Deals Dropping In First Quarter To Date, With Analysis, But Notes Transaction Size Grew

DeVoe & Company released a RIA Deal Book Alert titled “M&A Activity Slows in First Quarter,” which supplements the firm’s most recent RIA Deal Book, alerting the wealth management community of the continued downward slide in M&A activity in the first quarter of this year.

According to the release, RIA M&A has dropped 22% to date in 2023, at 38 transactions, as compared to the same period last year, at 49 transactions. January 2023 recorded 24 transactions, a 14% drop from 2022. From Feb. 1 to Feb. 27 this year, 14 transactions posted, compared with 21 in the same period in 2022, a 33% drop.  

Downward slide

David DeVoe, the firm’s Founder and CEO, said, “It’s early innings, but 2023 is tracking toward the industry’s first down year in over a decade.”

Analyzing the drivers behind the data, DeVoe continued, “On the one hand, the drop is not a surprise. There are many pressure points that historically have suppressed RIA M&A, including a declining stock market and high interest rates. On the other, the pipelines of DeVoe & Company and nearly all major acquirers are at very high levels.” 

David DeVoe, Founder & CEO, DeVoe & Company

The alert states that factors contributing to the decline may include fatigue among potential sellers and mid-tier buyers pulling back.

DeVoe & Company points out that the drop looks starker against strong activity last year as sellers completed transactions ahead of anticipated tax increases, as well as many transactions announced in early 2022 actually being executed in 2021.

Despite a drop in the number of deals, transaction size has grown, as 39% of deals completed so far in 2023 involved sellers with over $1 billion in assets, compared to 16% in the previous quarter and 29% in the first quarter of 2022. 

Michael Madden, Contributing Editor & Research Analyst at Wealth Solutions Report, can be reached at mmadden@wealthsolutionsreport.com

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