This year has already set new records for mergers and acquisitions activity in the registered investment adviser space, with 269 total transactions completed so far in 2024, according to data released this week by DeVoe & Company. This is higher than the previous record of 264 deals in 2022.
The fourth quarter of 2024 also set new records, becoming the most active quarter on record, with 78 deals reported as of Dec. 17, DeVoe said. This compares with 76 deals completed in the fourth quarter of 2021, the previous record.
“A record fourth quarter propelled a strong year into the 'record year' category,” said David DeVoe, founder and CEO of DeVoe & Company. “And key vendor decision makers continue to be entrenched in the benefits of scale and the solution for continuity.”
DeVoe attributed the record activity to lower interest rates, which lowered the cost of capital and stock market valuations while boosting RIA valuations. Further, so-called “meta-RIAs,” a phrase he uses to describe large firms with the capacity and management to grow their business quickly, have continued to become more competitive.
DeVoe expects M&A to continue through the final two weeks of 2024, leading to a strong start to 2025.
In the firm's October RIA Deal Book, DeVoe said he expected the most active players in the RIA M&A space to invest more aggressively by reducing the cost of capital and improving debt service ratios. Just this week, the Federal Reserve cut interest rates by a quarter of a percentage point in its third rate cut this year.
These consolidators have dedicated M&A teams working to build scale, improve resources and expand geographically. These firms have historically accounted for about 70% of RIA acquisitions.
Even the month of October did not new rhythms in RIA M&A activitywith 39 transactions, the highest monthly volume on record, DeVoe revealed. 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.