Deal Data

First Quarter 2020 Executive Overview

Wealth management M&A activity slowed in Q1 of 2020, with 46 transactions recorded in ECHELON’s M&A Deal Tracker versus 53 in Q4 2019. Activity fell as the rapid spread of the Coronavirus impaired the global economy, caused a sharp increase in market volatility – ultimately leading to a historic quarterly decline in U.S. equity markets. The S&P 500 Index and Dow Jones Industrial Average declined by 20% and 23%, respectively, which translated to the worst quarterly losses since Q4 1987.


At the moment, total deal activity for 2020 is still projected to be strong, albeit slightly behind the record-setting dealmaking that took place in 2019 when 203 transactions were completed, and behind the 220 deals projected in ECHELON’s year-end Deal Report. While deal momentum carried over from 2019 into Q1 2020, the sudden drop in markets and the abrupt slowdown in economic conditions – which began in late February – caused global M&A activity to slow in March.


Morgan Stanley’s (Ticker: MS) announcement in February that it will acquire E*Trade for $13 BN squarely ranked as the largest deal of the quarter. Through the acquisition, Morgan Stanley will absorb E*Trade’s $360 BN in AUM, which includes $19 BN under management in the company’s RIA custody division.


RIAs were the most active acquirers during the quarter, and were responsible for 19 transactions, or 41%, of the total deals in Q1. Strategic Acquirers/Consolidators were the second most active, accounting for 15 transactions, or 33% of aggregate Q1 activity. Banks and Private Equity firms – among the least active in total deals – were, however, responsible for six of the top ten acquisitions that took place in Q1.

Wealth Management Deals
Q1 RIA M&A Deal Volume Remains High, Decline from the Previous Record Quarter

Despite a decline in deal activity in Q1 from Q4 2019, overall deal volume remained at historically strong levels following a record-setting 2019. While the 46 total transactions in Q1 rank as the lowest quarterly total since Q4 2018, it still registers as the seventh most active quarter among the last 29 tracked in the Deal Report. There are 19 fewer deals expected in 2020 relative to 2019.

Breakaway Activity
Breakaway Activity Slows Sharply in Q1 2020 after a Record Q4 2019

Breakaway volume has trended upwards throughout this time horizon. That said, Q1 historically has witnessed fewer breakaways and this year saw a similar trend with 103 announced. There are 74 fewer breakaways projected in 2020 than the annual average since 2014.

Percentage Breakdown of RIA Acquirers by Firm Type
RIAs More Acquisitive in 2019

Pure-play RIAs were the most active buyers in Q1, completing 41% of the transactions in the quarter. The percentage of deals completed by strategics & consolidators increased in Q1 over 2019, making up 33% of wealth management deals in Q1. The "Other" category – including broker-dealers, private equity asset managers, and retirement benefits platforms fueled the acquisition activities in Q1.

Average AUM per M&A Deal
Average Deal Size Decreases

Average deal size remains strong and continues to hover well above the $1 BN+ AUM mark. This represents the fifth year in a row that average deal size has exceeded $1 BN in AUM. At the current pace, there would be 52 $1 BN+ acquisitions in 2020.


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© ECHELON Partners 2020. All rights reserved. Securities offered through ECHELON Capital Partners, LLC, member of FINRA/SIPC. ECHELON Partners and ECHELON Capital Partners, LLC, are affiliated companies.

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