Skip navigation
deflated hot air balloon

Echelon: RIA M&A Fell in 2023

Deal volume dropped for the first time in more than a decade, as average deal size increased and private equity continued to play a major role.

Mergers and acquisitions activity in the registered investment advisory space dropped last year for the first time in 12 years, according to data from investment bank and transaction advisory firm Echelon Partners.

One of a handful of firms that closely watch RIA deal volume and trends, Echelon tracked 321 transactions throughout the year, representing a 5.6% drop from the 340 deals the firm counted in 2022. The decrease in volume, more pronounced in the first two quarters, can be attributed to “a more restrictive financing environment,” according to Echelon’s report.

Dealmaking appeared to be on the rise through the second half of the year, however, with 95 transactions in the last three months—the second busiest quarter on record.

The amount of assets per transaction rose by 3.9% in 2023, to an average $1.7 billion, after falling nearly a quarter from a record $2.1 billion in 2022. While Echelon found the number of deals involving sellers with more than $1 billion in assets remained steady, a spate of deals in the $10-$20 million helped drive the rise in average deal size. 

“Another driver of deal size was the heightened creativity in deal structures, adopted by private equity firms seeking to get deals across the finish line in the face of higher borrowing costs,” according to authors of the report. “Structured minority investments, with features such as paid-in-kind and preferred distribution rights, have become more popular with buyers seeking to pursue deals in an environment that has seen [leveraged buyouts] more difficult to complete.”

Buoyed by private equity, the percentage of RIAs buying RIAs grew by 8.1%, accounting for 71% of all transactions last year and more than $466 billion in transacted assets. A little more than 9% of transactions were direct investments from private equity, while about 6% involved broker/dealers and 12% were other strategic buyers, such as banks, insurance companies and asset managers. An ‘other financial’ category that includes family office investors and holding companies makes up the remaining 1.6%.

The number of minority investments continued to increase in 2023, which saw 35 deals involving companies overseeing more than $2.2 trillion in cumulative assets. They also continued to be more prevalent among very large firms, according to Echelon, including eight that involved a target with more than $50 billion in assets and half of all deals involving a seller with more than $20 billion. Since 2019, minority deals have grown at an annual rate of 45%.

The most active buyers of 2023 (excluding sub-acquisitions) are all familiar names, with Savant Capital Management making the top five for the first time. Wealth Enhancement Group and Mercer Advisors are at the top of the list for the second consecutive year, switching places, with WEG announcing 16 deals and Mercer in second place with 11. (In 2022, Mercer was at the top of the list with 19 deals, followed by WEG at 14.) Captrust and Savant made the short list with nine deals each and Creative Planning with eight.

Collectively, these five firms acquired more than $101 billion in assets last year—almost 19% of the $536.4 billion tracked by Echelon.

Top transactions identified by Echelon include The Carlyle Group’s minority investment in Captrust, Genstar’s reinvestment in Cetera, CI Financial’s 20% sale to a consortium of investors that included Bain Capital and Osaic’s deal to acquire Lincoln Financial’s wealth business.

Creative Planning is also on the list for its purchase of Goldman Sachs’ Personal Financial Management unit, and WEG and Mercer made the list as sellers after Stone Point Capital bought a stake in the former and Altas Partners and Harvest Partners both invested in the latter.

In the wealth technology space, which Echelon also tracks, deal volume climbed by 8.3% over the previous year, ostensibly “propelled by the need to develop comprehensive end-to-end platforms.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.