Wealth management M&A activity “continues to thrive,” with 90 transactions announced during the first quarter of 2024, representing a 20% increase over 2023’s first quarter, according to ECHELON Partners’ 1Q24 RIA M&A Deal Report.
While overall activity was down from the fourth quarter—which is often the most active quarter for deal announcements—it still marks the second highest recorded total for a first quarter in sector history. And because most transactions typically take an average of nine months to complete, the first quarter increase likely reflects deals from 2023 extending into 2024, the report notes.
“This sets the stage for a year of robust M&A activity, helped by recent strong market performance and a stabilizing interest rate outlook,” the firm suggests.
Continuing to play a dominant role, Strategic Acquirers accounted for nearly 86% of transactions in the first quarter, announcing 77 total transactions so far in 2024. Private equity was involved in roughly 69% of transactions, contributing to over $200 billion in assets transacted in the first quarter. Still, while the deal count increased quarter-over-quarter, the total transacted assets via direct private equity investments decreased by over $500 billion, which the report notes can be attributed to several large transactions in late 2023.
Financial Acquirers, meanwhile, announced 13 deals in the first quarter, representing an 85.7% increase over the previous quarter’s count. These 13 transactions announced by financial buyers involved $225 billion in assets, which was a sizeable decrease from the $1.1 trillion transacted in the fourth quarter of 2023. This decrease, the report notes, can be attributed to several large RIAs receiving private equity investments in the fourth quarter.
A Focus on Larger Deals
Additional findings show that RIA assets transacted increased relative to the last quarter, totaling over $210 billion in the first quarter. This marks a 13.1% increase from the fourth quarter of 2023, despite nine additional deals having been announced during the quarter. This trend, according to the report, highlights strategic buyers' continued emphasis on larger deals as well as recent strong equity market performance.
To that point, 2024 has already seen a large number of $1 billion+ AUM deals, which have contributed to the rise in average assets per deal. During the first quarter, there were 35 deals involving at least $1 billion in assets or a 6.1% increase relative to the first quarter, 2023’s total of 25 $1 billion+ deals.
Top consolidators like Focus Financial Partners, Mariner Wealth Advisors, and Hightower Advisors all announced at least one $1 billion+ transaction during the first quarter.
ECHELON notes that it expects buyer demand for these larger and well-established firms to continue as they “provide excellent entry points into new markets and platforms for potential sub acquisitions.”
What’s more, while RIAs continue to dominate the overall wealth management buyer population, this quarter’s largest transactions included a diverse group featuring RIAs, private equity firms, broker dealers, asset managers and insurance companies, the report further notes.
For instance, LPL Financial announced the largest deal of the quarter, acquiring $100 billion Atria Wealth Solutions and the firm’s 2,400 advisors in February 2024. Other notable large transactions include Mariner Wealth’s acquisition of $90 billion AndCo Consulting and Focus Financial Partners’ acquisition of management’s stake in $30 billion SCS Financial.
Expanding Reach
Meanwhile, the WealthTECH segment remains an attractive investment opportunity as many firms are looking to service the growing wealth management market, the report further observes.
The number of deals in the first quarter came in lower than the previous quarter's count, landing just seven transactions shy of the 20 deals announced in the fourth quarter of 2023. That said, it’s important to note the diversity of acquirers, ranging from private equity, fintech platforms, venture capital, and others, says ECHELON.
One such deal involved PCS Retirement, which provides retirement plan administration and cutting-edge technology solutions; it received a majority investment from Lee Equity. With access to Lee Equity's resources and expertise, PCS Retirement is “poised to expedite innovation, broaden its market reach, and elevate its service portfolio to cater to the diverse needs of retirement plan sponsors, advisors, and participants,” the report observes.
As for the remainder of 2024, ECHELON expects a slight uptick in transaction value and volume. During the first quarter, the average assets per deal maintained an upward trajectory, hitting $1.8 billion, which was a slight increase from the $1.7 billion recorded in 2023. ECHELON projects that the average assets per deal for 2024 maintain a level above $1.8 billion, signaling a modest rise compared to both 2023 and the first quarter, 2024 figures. The firm also expects a total of 330 deals to be announced in 2024—which would be a moderate increase from the 321 transactions announced in 2023.
A copy of the report can be found here.
