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Big Fish Keep Eating Little Fish

M&A firm DeVoe & Company recently released new data on transaction volumes in the RIA market. For September year to date, 160 RIA deals have closed. With three months remaining until year end, 2021 has already topped 2020’s record full year total of 159 deals. The chart below shows the accelerating growth in M&A transactions in the last decade.

Market dynamics continue to support rising deal volumes. On the demand side, aggregators are becoming more aggressive, and less price sensitive, as they race to build the necessary volume to compete with other rapidly expanding firms. Although a seller’s market, supply also seems relatively healthy. Mid-sized RIAs with aging managers face being forced to expand operations to remain competitive or sell out in a period when markets are favorable, and demand is high.

We expect the pace of consolidation in the RIA market to continue in the near to intermediate term supported by strong financial markets, abundant private equity involvement, the need for efficiencies of scale, and competitive necessity.