The M&A momentum from the second half of 2020 carried into 2021, with strategic and financial buyers driving transformative deals in the wealth management sector, according to Echelon Partners. Their Q1 2021 RIA M&A Deal Report recorded 76 deals, the most active quarter in industry history and a 10% increase over Q4 2020’s 69 deals. This marks the third consecutive quarter with a new record and positions 2021 as the ninth straight year of record-setting M&A activity.
Record activity was fueled by strong market conditions, growing buyer competition, favorable terms for sellers, and anticipation of potential 2022 capital gains tax hikes under the Biden administration. Mega-deals dominated AUM growth, with total assets transacted exceeding $1.5 trillion. Leading transactions included Wells Fargo Asset Management’s $2.1 billion sale to GTCR and Reverence Capital Partners, Voya’s sale of $40 billion in assets to Cetera Financial Group, Warburg Pincus’ recapitalization of Edelman Financial Services, CAPTRUST’s acquisition of Cammack Retirement, and Aquiline Capital’s purchase of SageView Advisory Group.
Strategic acquirers and consolidators accounted for 46% of deals in Q1, led by private equity-backed platforms such as Mercer Advisors, CAPTRUST, Beacon Pointe Advisors, and Cetera Group. Pure-play RIAs completed only 22% of deals, reflecting the rise of larger transactions averaging $2.3 billion in AUM, compared to $450 million for RIA-to-RIA deals. Breakaway activity also declined, with 124 breakaways in Q1, averaging $346 million in AUM, down from 2020 but still up 21.9% from 2019 levels…