RIA M&A Demonstrates Remarkable Resilience Amidst Market Challenges & Significant Turbulence

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Mar 20, 2024, 09:05 ET

Advisor Growth Strategies' 2024 RIA Deal Room report shows RIA M&A performed well as the race to institutionalize heats up

The stage is set for winners and losers in a new competitive framework that requires diligent capital deployment and a culture of alignment

PHOENIX, March 20, 2024 /PRNewswire/ -- Despite a challenging capital environment in 2023, RIA M&A activity experienced only a modest decline in transaction volume. While valuations remained stable, the tone for market participants was cautious optimism, according to The 2024 RIA Deal Room report from Advisor Growth Strategies ("AGS"), a management consulting and transaction advisory firm. The sixth annual report, sponsored by BlackRock, offers an in-depth analysis of 2023 M&A transactions, revealing nuanced shifts in dynamics and providing valuable insights for participants navigating the evolving wealth management landscape. This year's report provides unique case study insights from buyers of all sizes and activity levels.

"2023 was the proof point; RIA M&A persisted, reflecting the resilience and adaptability of the market," said Brandon Kawal, Principal and newly appointed Partner at Advisor Growth Strategies. "The early days of the gold rush in the RIA space are in the past, but the competition for new territory is just beginning. With sellers expressing diverse needs and an influx of buyers, creativity in deal-making is evident. As M&A continues to professionalize, we anticipate increased demand and a favorable market for sellers in 2024, with opportunities for strategic growth."

Findings from The 2024 RIA Deal Room report include:

Redefinition of the "middle market" within the RIA industry, driven by the size and breadth of the largest platforms. This reshuffling sets the stage for potential transformative industry transactions, with established platforms and new middle-market firms poised to lead the way.
Deal structures increasingly prioritize equity, reflecting a trend that began in 2022, with buyers seeking risk alignment and partnership-oriented deals while sellers explore creative monetization options such as minority stakes.
Sellers continued to enjoy a fruitful market in 2023, with demand remaining stable and a diverse range of acquirers entering the fray, including incumbent acquirers, independent broker-dealers, and first-time buyers. The emergence of new minority specialist investors further enriched the buyer landscape, as sellers were met with a more selective buyer population that leaned into finding their ideal M&A candidates.

"Despite the challenges faced in 2023, the resilience of the RIA M&A market underscores its enduring strength and potential for growth," added John Furey, Managing Partner at Advisor Growth Strategies. "Buyers and sellers are navigating a dynamic landscape that presents new opportunities and considerations for strategic partnerships. Additionally, it is fitting to announce in tandem the elevation of Brandon Kawal to Partner, recognizing his invaluable contributions and expertise to our clients' success."

Mr. Kawal joined Advisor Growth Strategies in 2014 and was elevated to Principal in 2019. The RIA Deal Room report, conceptualized and co-authored by Mr. Kawal, has consistently brought valuable insight to the wealth management industry since its inception in 2018. The report was recognized as the Industry Research Initiative of the Year at the 2021 Wealth Management Awards.

"As sponsors of The 2024 RIA Deal Room report, BlackRock recognizes the invaluable insights it offers to advisors considering M&A. In a market marked by challenges, this report showcases the resilience of RIA M&A and provides essential guidance for navigating the evolving landscape," said Liz Koehler, Head of Blackrock's US Wealth Advisor Engagement Team.

Receive your copy of The 2024 RIA Deal Room report by clicking here.

Advisor Growth Strategies will be hosting a series of webinars featuring industry experts to further explore recent trends in RIA M&A. Register to join using the links below:

RIA M&A: The Race to Institutionalize, Wednesday, March 27^th 12:00 PM (ET) Register here.
Building an Enterprise Platform & Navigating the New Middle of the RIA Market, Thursday, April 11^th 12:00 PM (ET) Register here.

About Advisor Growth Strategies
Advisor Growth Strategies, LLC ("AGS") is a M&A advisory and management consulting firm for Registered Investment Advisors ("RIAs"). AGS understands the business of running a business and collaborates with RIAs to identify ideal partners for long-term success. It encourages an M&A candidate to reimagine what its future business could be. The team deploys a strategic and comprehensive evaluation to explain all options to ensure the decision-making process will add value for key constituents – owners, employees, and clients.