Deal Data

Second Quarter 2020 Executive Overview

Executive Overview: The second quarter of 2020 was one of the most unique periods for merger and acquisition activity in the history of the wealth management industry. While total deal volume dropped by 20% from Q1 2020, and 34% compared with Q2 2019, the firms involved in the most recent M&A – particularly the sellers –  have grown significantly. There was also a flurry of activity down the home stretch of the quarter, with nine deals announced in the last 11 days of June. 

The Rise of Professional Buyers: The decline in transactions was largely expected, as the Q1 market slide delayed the completion of deals that were in progress. Professional buyers – which include platforms, consolidators and aggregators – and their interest in acquiring larger RIAs firms, fueled a substantial amount of deal activity during the quarter. 

This development, and the increased competition among professional buyers, will continue to play a critical role in influencing valuations, deal structure and the  composition of M&A activity moving forward. 

Valuations have remained strong, despite the slowdown in activity and the disruptions in the equity markets earlier this year. While pricing is not often disclosed, two deals in Q2 offered a clear picture of the value of a pair of industry powerhouses: Empower Retirement’s acquisition of Personal Capital at the end of June values the firm, which has $12 BN in AUM, up to $1 BN. GTCR’s 25% stake in CapTrust, which has $45 BN in AUM, assigns an overall value of $1.25 BN to the RIA.

The Outlook for RIA M&A activity in the second half of 2020 remains strong. The notable uptick in May and June is an indicator that normal deal processes have resumed – and the demand for high quality RIA firms has not waned. With equity markets recovering, and new sellers beginning to explore opportunities in Q2, there is an increased likelihood the M&A activity levels could resume their 2019 pace in the 2H 2020.

Wealth Management Deals
Q2 RIA M&A Deal Volume Drops Sharply Amid Coronavirus Fallout

There were 35 deals recorded in Q2 2020, which is the lowest quarterly total since Q3 2017. The spread of COVID-19, which shocked capital markets and the broader economy in March and April, caused a slowdown in the deal process for many. A number of deals that were expected to be finalized in Q2 were delayed and are now on pace to be completed in Q3. There are 41 fewer deals expected in 2020 relative to 2019.

Breakaway Activity
Breakaway Activity Sees Low Volume but Record AUM Transacted

Average breakaway AUM in Q2 2020 was $494 MM, which tops Q1’s record-setting average of $362 MM and is 74% higher than 2019’s average breakaway AUM of $284 MM. Volume continues to remain low in 1H 2020, and total YoY breakaway activity is expected to decrease by 27%.

Percentage Breakdown of RIA Acquirers by Firm Type
RIAs More Acquisitive in 2020

Pure-play RIAs were the most active buyers in Q2, completing 51% of the transactions in the quarter and bringing them to 46% of deal so far in 2020. The percentage of deals completed by strategics & consolidators deceased to only 20% in Q2 compared to 33% in Q1. Banks continue to be the least active category in terms of deal activity, completing only 3 deals, or 9% of total transactions in Q2. The "Other" category – including broker-dealers, private equity asset managers, and retirement benefits platforms accounted for 21% of transaction in Q2, roughly the same level from the 22% of transactions in Q1. 

Average AUM per M&A Deal
Average Deal Size Increases

Despite the decline in deal activity in 2020, the average deal size has increased significantly. To date in 2020, the average deal AUM is $1.5 BN – the highest average on record. In the second quarter, 46% of all announced transactions involved an acquisition target with at least $1 BN in AUM. In 2019 only 29% of total acquisitions included a $1 BN+ target.


  • Twitter Social Icon
  • LinkedIn Social Icon

© 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.

  • Twitter Social Icon
  • LinkedIn Social Icon