Deal activity in the wealth management space continued to break records last year, with 2024 becoming the most active M&A year in the industry's history, with 336 deals, up 14% from 2023, according to a recent report from Echelon Partners.
Echelon highlighted the top 10 wealth management M&A transactions by assets transacted in 2024, seven of which involved a private equity buyer. Private equity firms made 50 direct investments last year, up nearly 67% from 2023. Last year saw 259 total private equity deals, including outright and tied purchases of portfolio companies, up from 199 in 2023.
This highlights the growing dominance of private equity in M&A, and Echelon expects this to further drive Tuck's M&A and acquisitions in the years ahead.
“Following periods of significant private equity investment in wealth platforms, Tuck-in M&A activity tends to increase (as evidenced in 2021 and 2022),” Echelon stated in its report. “We estimate additional capital of 3-4x the initial investment through follow-on debt and equity injections to drive these tunes.”
When private equity firms are looking to invest in RIAs, they are looking for profitability (over $5M in EBITDA), organic growth of 10% or more, experienced management teams and a deep bench of advisor talent , with limited to no key person Risk, Echelon said.