M&A Activity Surged in January - National Association of Plan Advisors

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Following a rush of M&A activity in the last half of 2020, which led to another record-setting year, 2021 shows no sign of slowing down. 

According to Fidelity’s latest Wealth Management M&A Transactions Report, January 2021 was the single largest month for M&A activity since the firm began tracking activity in 2016. 

With a total of 23 RIA deals representing $47.8 billion in client AUM, January surpassed the previous record of 17 in December 2020, the report notes. To put this in perspective, Fidelity observes that the total assets represented in M&A activity throughout all of 2016 was $49 billion. January also surpassed the highest monthly AUM record by $2.1 billion, previously set in November 2020. 

“There were a significant number of $1 billion-plus deals, with several highly visible and transformative transactions,” observes Scott Slater, Fidelity Institutional VP of practice management & consulting. In fact, seven of January’s deals involved sellers with $1 billion-plus in client assets, totaling 85% of the month’s AUM, according to the report. 

Those included Silicon Valley Bank’s purchase of multi-firm owner Boston Private Bank & Trust Company, the sale of Bel Air Investment Advisors to Hightower Advisors, Rockefeller Capital Management’s purchase of Whitnell & Co. from Associated Banc-Corp., and CI Financial’s purchase of its second $1 billion-plus RIA, Segall Bryant & Hamill. 

Serial acquirers continued to drive activity in January, with Mercer Advisors landing three deals after announcing four in December, Hightower Advisors announcing three, and both CAPTRUST Financial Advisors and Beacon Pointe Advisors each completing two, the report notes. 

“In this very active market, it’s crucial that potential sellers determine their strategy, buyer characteristics, deal structure and timing that is right for their firm,” Slater emphasizes. 

According to Fidelity’s report, all of the fundamental forces fostering M&A are in place for another active year: significant capital, well-prepared buyers, the need for better and scalable operating and service model platforms, as well as the need for succession solutions and talent. 

Meanwhile, after significant consolidations in 2019 that led to a quiet 2020, the IBD space had three deals in January, totaling nearly $24 billion, including B. Riley Financial’s acquisition of $18.9 billion National Holdings Corporation and BD serial acquirer Atria Wealth Solutions purchasing SCF Securities.

And only one month into the quarter, the January volume sets the stage for the first quarter with 50-plus transactions, and potentially more, according to DeVoe & Company. “This unprecedented volume is being driven by COVID’s succession wake-up call, high valuations, and seller’s interest in gaining the power of scale,” notes David DeVoe, the firm’s Founder and CEO.  

DeVoe suggests, however, that this level of activity is unlikely to be sustained for several months or quarters. “Should the industry experience a series of months with over 30-plus transactions, there would likely be a decrease in valuations and some sellers left without their favorite buyers,” he says. 

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M&A Activity Surged in January - National Association of Plan Advisors
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