The U.S. Registered Investment Advisor (RIA) industry reached a record 272 mergers and acquisitions (M&A) transactions in 2024, according to DeVoe & Co.’s fourth-quarter report. The numbers were record-breaking for the year, quarter, and most active month in history, with higher levels of private equity participation.
“This historic level of activity provides significant momentum heading into 2025, after nearly three years of steady deal flow,” states the report by the San Francisco-based consulting firm. In its conclusions, the report projects that “merger and acquisition activity will steadily increase over the next five or more years, barring any unforeseen events.”
RIA M&A activity remained slightly above 2023 levels from January to September 2024, making it seem unlikely that the 2022 record would be surpassed. During 2022, industry merger and acquisition activity maintained a steady pace of around 60 transactions per quarter, which continued for 11 quarters. However, 2024 ended with a record-high quarterly mark of 81 transactions, pushing the year into record territory. October was a decisive month, with 39 transactions, nearly doubling the 21 transactions recorded the previous year and surpassing the previous monthly high.
“This momentum is likely to continue into the new year, and the industry may once again be on track for a steady increase in mergers and acquisitions in the future,” said David DeVoe, founder and CEO of DeVoe & Co.
Rate Cut Momentum
According to the report, on the buyer front, the increase in activity was primarily driven by interest rate cuts that began in September 2024. Lower capital costs, implications for debt ratios, and the expectation of more cuts in the future resulted in highly leveraged acquirers easing financial constraints.
On the seller side, post-election market gains boosted valuation expectations and delayed any willingness to explore potential sales.
The fourth-quarter increase in private equity-backed buyer activity was also evident in their participation in transactions. Private equity firms were directly or indirectly involved in a record 78% of all RIA transactions in the fourth quarter of 2024, a significant increase from 69% participation in the first three quarters of the year. Announced acquisitions by major players such as Beacon Pointe, Cerity Partners, and Waverly Advisors exemplify this increase.
Shift in Buyer Dynamics
According to the report, the fourth quarter saw a change in buyer dynamics. RIA buyers captured 36% of total transactions in 2024, up from 29% in 2023, while consolidator activity fell to 44% during the year, down 3 points. The “other buyers” category (private equity firms, broker-dealers, banks, and all other RIA buyers) slightly declined, representing 20% of all transactions, compared to 24% in 2023.
DeVoe & Co. Methodology
DeVoe & Co. focuses on transactions of $100 million or more in assets under management to optimize the statistical accuracy of its reports and excludes SEC-registered hedge funds, independent broker-dealers, mutual fund companies, and other firms that do not operate as traditional RIA firms.
