Registered investment adviser firms are on pace for a record year in mergers and acquisitions, after their strongest-ever quarter, according to an analysis by Schwab Advisor Services, the RIA division of Charles Schwab Corp.
The first quarter saw 24 acquisitions, said Dave DeVoe, the managing director of strategic development at Schwab Advisor Services in San Francisco. That was up from 19 in the year-earlier quarter, he said.
M&A has been on a tear among RIA firms for the past seven years, which is as long as DeVoe has been tracking the numbers.
Starting at 20 transactions in 2003, M&A grew steadily, to 24 in 2004, 52 in 2005, 58 in 2006, 81 in 2007 and 88 in 2008.
Transactions dropped a bit last year, to 71, but DeVoe said he thinks this was an anomaly attributable to the floundering market's effect on firm valuations.
"Many advisers walked away from deals on the table to take care of clients, which was the right thing to do," he said.
DeVoe noted that buyers are increasingly interested in sub-$250 million RIAs. Two recent deals exemplifying this trend are Focus Financial Partners' purchase of Bridgewater Wealth Management, a $150 million shop in Bethesda, Md., and Moss Adams' acquisition of Rowling Dold & Associates, a $200 million RIA in San Diego. Historically, sub-$250 million firms accounted for one-third of all RIA deals, but so far this year, their share has been 58%.
