Wealth Management M&A Dips Slightly in Q2

Wealth management mergers and acquisitions activity marginally declined in the second quarter of 2023, mirroring a Q2 trend from 2020 through 2022, according to Echelon Partners’ “2Q23 RIA M&A Deal Report.”

There were 65 transactions in the wealth management sector during 2Q 2023, a moderate decline compared to previous quarters, according to the M&A consultancy.

“In 2Q23, quarterly deal volume fell to its lowest point since 2Q [2021],” the report stated. “This is partially driven by macroeconomic uncertainty affecting all industries but is also largely due to the seasonality in wealth management M&A activity. Buyers and sellers tend to close more deals at the beginning and end of the year which leads to a seasonality in deal announcements.”

The overall M&A transaction value for all industries in the United States decreased by 44% in the first half of 2023 compared to the first half in 2022, based on information from the S&P Global. However, during the same time frame, the wealth management industry experienced a notable increase of 38.4% in total transacted assets under management, a proxy for transaction value, Echelon noted.

Echelon found the increase in transacted AUM encouraging, considering the higher cost of capital and the activity seen in other industries. The overall data indicated that wealth management M&A remains resilient.

“In the second quarter, buyers announced 65 transactions, dipping below the 75 announced in 1Q [2023],” the report stated. “The relatively low volume this quarter is consistent with historical trends as the second quarter is typically the least active quarter of the year in terms of deal announcements.”

Some of the biggest dealmakers were in asset management and private equity, including Bain Capital LP, Flexpoint Ford LLC, Ares Management Corp., Leonard Green & Partners LP, Stone Point Capital LLC and Atlas Partners.

Retirement and employee benefits aggregator OneDigital ranked ninth among the top buyers in part due to its acquisition of Huntington Bank’s $5.6 billion retirement advisory business. SageView Advisory Group ranked 10th in part due to its acquisition of the lead partners of Retirement Benefits Group, a retirement plan consulting firm with $5.2 billion AUM.

Echelon’s report also highlighted that significant investments were made in large registered investment advisers during Q2. Almost half of all transactions in 2023 involved RIA targets with more than $1 billion in AUM. Furthermore, Q2 outperformed the reported count of 33 transactions in Q1 by 9%.

The deals tracked and identified in the report included any transaction involving an RIA with more than $100 million of assets under management, according to Echelon.