Fidelity’s latest wealth management M&A transaction report shows that October posted 13 RIA deals representing $19.1 billion in AUM and marked the fifth consecutive month with 12 or more transactions representing $12 billion or more in AUM in 2020. The report notes that only five individual months have exceeded these totals since Fidelity began tracking this activity in 2016.
As for year-to-date activity, Fidelity notes that there have been 96 RIA transactions representing $122.9 billion, which is nearly the same activity level as the year to date in October 2019, despite an extremely slow March, April and May.
The report further observes that as an indicator of an increasingly concentrated landscape, the median seller size in 2020 is now $536 million, which is up 18% from a year ago.
Noteworthy October transactions include the sale of Allworth Financial to Lightyear Capital and Ontario Teachers’ Pension Plan, as well as three deals by Focus Financial Partners representing $3.9 billion in AUM, and Wealthspire Advisor’s acquisition of StratWealth and its $1.5 billion in AUM.
In addition, serial acquirers Mercer Advisors, Hightower Advisors, Wealth Enhancement Group and Buckingham Strategic Wealth all completed transactions during the month, the report notes. Hightower and the multi-family office Pathstone took on minority investment capital—a trend that is increasingly prevalent, Fidelity further observes.
“2020 is proving to be an incredibly robust year for M&A, showcased in the healthy activity experienced over the last five months,” remarks Scott Slater, M&A specialist and Fidelity Institutional VP of practice management & consulting.
Slater expects the strong pace with the RIA industry to continue as the year comes to an end. By contrast, the report notes that the more consolidated IBD space continues to be relatively quiet in 2020, following the record activity seen in 2019 and 2018.
The report emphasizes that even with the market turbulence, the primary forces that have been fueling M&A—significant external capital, the need for talent, a lack of succession planning and growing platform requirements—have remained consistent drivers.
“Many expected the work-from-home dynamic to slow M&A activity, but buyers’ preparedness and determination is evident in the innovative strategies developed to connect remotely and understand how a firm operates,” adds Slater. “Ensuring a cultural fit remains a top priority for firms considering a deal, and these remote connections, such as Zoom introductions, grant the opportunity to get to know people across the organizations on a more personal level,” he observes.
This article originally appeared on NAPA.
