RIA Sector Hits Record M&A Activity in October

Registered investment advisers set a new monthly record for mergers and acquisitions in October, in part based on the lower cost of capital, according to DeVoe & Co., an M&A consultancy that has been tracking such deals for 20 years.

With 39 RIA transactions recorded, the volume surpassed the previous high of 33 transactions in January 2021 and nearly doubled the 21 deals announced in October 2023. The year-to-date RIA M&A volume has risen by 12% through November 1, with 232 transactions completed in 2024, up from 208 at this point last year.

David DeVoe, founder and CEO of DeVoe, stated that the sharp increase in October M&A activity follows nearly three years of stable levels, with the 65 transactions completed in this year’s third quarter matching the typical range since early 2021.

“The surge in October’s RIA M&A activity is a conspicuous spike following nearly three years of unremarkable activity,” DeVoe said in a statement.

He added that recent predictions about rising private equity buyer interest, driven by anticipated rate cuts, likely played into the acceleration. In October, 83% of deals were executed by private equity or PE-backed acquirers, an increase from the 70% norm seen over recent years.

Based on the “Q3 2024 DeVoe Deal Book,” private equity-backed firms are expected to continue dominating the RIA space as the cost of capital falls, enabling these firms to act more aggressively.

With the cost of capital decreasing and debt service ratios improving, these firms will have more confidence to deploy capital, the report explained, noting that these consolidators—firms focusing on growth through acquisition—comprised almost 50% of October’s transactions.

The Federal Reserve lowered the target range for the federal funds rate in September, and markets are forecasting another cut this Thursday.

Beacon Pointe, Cerity Partners and Waverly Advisors led the charge in October with three acquisitions each, a rare level of activity for single firms in a month.

M&A among retirement plan advisories has also been strong throughout 2024, according to a recent report by consultancy Marshberry. That firm reported 20 deals involving retirement advisories in 2024 through October, some of which operate as RIAs.

The DeVoe “RIA M&A Deal Book” tracks M&A trends for RIAs with assets under management of at least $100 million.