The third quarter of 2020 will be remembered as one of the most unique periods of merger and acquisition activity in the history of the wealth management industry.
There were a record number of deals in Q3 – 55 transactions in total, according to the latest ECHELON Partners RIA M&A Deal Report – which surpasses the previous high of 53 deals that our research tracked in Q4 2019.
This record period comes directly after just 35 deals took place in Q2. This 57% increase in quarter-over-quarter M&A activity also registers as one of the sharpest increases in the industry’s history, marking a major rebound after the COVID-19-related market declines delayed and prolonged normal deal-making activity, as the figure below illustrates:
Overall activity levels tell just one part of the story, however, behind M&A in the wealth management market – which continues to gain more recognition from private equity and non-U.S. financial institutions.
Notably, we continue to see strong valuations for RIA firms, with larger and more established firms engaging in M&A activities – both as buyers and sellers.
This is an ongoing trend that has been developing for several years, but the firms that are being acquired in 2020 are now some of the largest – with an average of over $1.7 billion in assets – and most professionally run organizations in the wealth management industry.
In total, there were 23 firms with more than $1 BN in assets acquired during the third quarter – yet another record that was set during the period.