This year has already set new records for mergers and acquisitions activity in the registered investment advisor space, with 269 total transactions completed so far in 2024, according to data released this week by DeVoe & Company. That’s higher than the previous record of 264 deals in 2022.
The fourth quarter of 2024 also set new records, becoming the most active quarter in history, with 78 reported deals as of Dec. 17, DeVoe said. That compares to 76 deals finalized in the fourth quarter of 2021, the prior record.
“A record fourth quarter pushed a strong year into the ‘record year’ category,” said David DeVoe, founder and CEO of DeVoe & Company. “The primary decision-drivers of sellers continue to be rooted in the benefits of scale and solving for succession.”
DeVoe attributed the record activity to interest rate cuts, which reduced the cost of capital, and stock market appreciation driving up RIA valuations. Further, so-called “meta-RIAs,” a phrase he uses to describe the large firms with the capacity and management to grow their business quickly, have continued to become more competitive.
DeVoe expects M&A to continue during the last two weeks of 2024, leading to a strong start in 2025.
In the firm’s October RIA Deal Book, DeVoe said he expected the most active players in the RIA M&A space to invest more aggressively as the cost of capital comes down and debt service ratios improve. Just this week, the Federal Reserve lowered interest rates by a quarter percentage point in its third rate cut this year.
These consolidators have dedicated M&A teams working to build scale, enhance resources and expand geographically. These firms have historically accounted for approximately 70% of RIA acquisitions.
The month of October also saw new highs in RIA M&A activity, with 39 transactions, the highest monthly volume on record, DeVoe found. October’s volume surpasses the previous high of 33 deals recorded in January 2021, and was nearly double the volume in the year-ago period, which saw 21 deals.