RIA’s M&A activity continues to set new records in 2021, according to data released Thursday by Fidelity and Charles Schwab.

According to Schwab’s 2021 Assets in Motion report, 85 deals were closed in the first half of this year, nearly doubling the total number of deals in 2020. Almost $ 160 million in assets under management were acquired over the course of the year. of the first six months of 2021, an increase of 19% from 2020 and 23% from 2019, Schwab said.

The average transaction size has also increased. More than 2 in 5 sellers in the first half of this year had more than $ 1 billion in assets under management, while the average deal size was $ 1.86 billion, up 19% from 2020 and 23% compared to 2019, according to Schwab.

“However, none of this seems really unsustainable,” said Tony Parkin, managing director, business consulting and education at Schwab Advisor Services. “It looks more like a new normal of business,” he told reporters in an online briefing Thursday.

Fidelity Data Highlights

Highlights from Fidelity’s third quarter 2021 M&A report, covering M&A activity in the wealth management industry during the last quarter, and M&A transaction report from wealth management September 2021, September was a record month for RIA’s merger and acquisition activity.

There were 23 transactions last month, representing $ 64.3 billion in client managed assets, surpassing January’s high of $ 48 billion client managed assets by 34% and nearly surpassing January’s record. of 24 transactions, according to Fidelity.

The third quarter hit another quarterly RIA M&A record, with 54 deals representing $ 115 billion in client assets under management, Fidelity said. Year-to-date totals (135 RIA transactions representing $ 247.2 billion customer AUM) have already exceeded 2020 totals (131 RIA transactions representing $ 183.5 billion customer AUM). ).

There have been several large deals in 2021, with more than 61 deals of $ 1 billion or more since the start of the year (13 as of September), with eight acquirers completing one or more of those deals, Fidelity said. .

Led largely by serial acquirers looking to build long-lasting and well-known domestic businesses, the continued momentum in M&A activity over the past month resulted in another record quarter, representing the fourth quarterly record in the past 15 years. months, ”according to Scott Slater, Mergers and Acquisitions Specialist and Vice President of Practice Management and Counseling, Fidelity Institutional.

The trends echoed data on mergers and acquisitions released by DeVoe & Co. last month. Transaction totals differ from report to report due to the different systems that each company uses to calculate the data.

More on the story

“The transaction data alone, however, tells only part of the story,” Schwab said. “And a one-dimensional part to that. Behind the numbers, mergers and acquisitions are a very human and multi-faceted endeavor, ”the company said in its RIA Industry M&A Behind the numbers report, also released Thursday.

Schwab surveyed buyers and sellers in five recent deals to take a closer look at what was going on beyond the industry’s M&A data, he said. The report reflected key takeaways from those talks with executives of the five companies and provided insight into the M&A process, as well as advice for companies that might consider a clean deal, Schwab said.

The RIAs included in the interviews were American Money Management, Arrowroot Family Office, Homrich Berg Wealth Management, MAI Capital Management and Mercer Advisors.

5 key points to remember

1. Focus, stay focused.

In all of the interviews, business executives “stressed the importance of being clear about why a transaction made sense to their business and its customers,” according to Schwab. “They challenged themselves to define their long-term strategy and, once defined, keep it front and center as they considered the benefits that a deal could bring,” Schwab said.

“For some, it was about planning a possible succession; others were looking for partners whose strengths complemented theirs or saw benefits in expanding their services or geographic footprint, ”Schwab said.

“It was also an exercise to be clear about what they didn’t want,” Schwab said in the report. “From non-negotiable elements around transaction structure and investment philosophy to critical intangibles such as corporate culture, these factors were equally important in helping companies stay focused on their long-term strategy throughout. throughout the process of identifying the right partner and navigating a deal. “