The registered investment advisor community saw a surge in M&A activity last month, with 39 transactions, the highest monthly volume on record, according to an analysis by DeVoe & Company.
October volume exceeds the previous high of 33 deals recorded in January 2021 and was nearly double the volume in the year-ago period, which saw 21 deals.
“While not much should be read into a single month of data, October's increase in RIA M&A activity is a notable increase after nearly three years of flat activity,” DeVoe CEO and founder David DeVoe said in a statement. . “DeVoe & Company recently predicted that interest rates will fall likely to increase PE-backed buyer activity; it seems evident that these organizations were accelerating their activity in anticipation of the long-awaited reduction in rates”.
In the year to November 1, deals are up 12% from the same period in 2023, with 232 transactions. This compares with 208 deals for the same period last year.
Private equity or private equity-backed firms accounted for 83% of deals in October. These firms have historically accounted for about 70% of RIA acquisitions.
DeVoe points to Beacon Pointe, Cerity Partners and Waverly Advisors, which each did three deals during the month.
DeVoe Deal Book's third quarter said that as the cost of capital declines and debt service ratios improve, the most active players in the RIA M&A space will invest more aggressively. Specifically, the most well-capitalized consolidators—those backed by private equity firms—will become more active in the space over the next 12 to 18 months. These consolidators have dedicated M&A teams working to build scale, improve resources and expand geographically.