The number and size of mergers and acquisitions among RIAs is on the rise, even as revenue and profitability are increasing.
This is according to Schwab Advisor Services, which found that total and average deal size both rose during the first six months of 2015.
According to Schwab, that's an indication that "the industry has both the financial means and the appetite to make strategic moves in order to achieve scale and gain competitive strength."
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During the first half of the year there were 37 completed transactions. During the same period in 2014, there were just 29, data indicate.
Total transaction value was also much higher: it increased 53 percent to $49.8 billion in assets under management (AUM), a jump from $32.6 billion in the first half of 2014.
Not to be left behind, average deal size also hit the highest level since 2009, coming in at $1.3 billion in AUM. (Back in 2009, the average transaction size for the entire year was $1.7 billion in AUM.)
The kinds of firms doing the buying during the first half of the year are pretty much the same as during earlier periods, with 79 percent on the buy side being strategic acquiring firms (SAF) and RIAs. Forty-three percent of transactions were led by SAFs and 38 percent were closed by RIAs.
Firms aren't necessarily looking toward M&A as methods of achieving economies of scale, although that's certainly true for some.
Independent RIAs have been doing well for the past five years, with 42 percent doubling revenues and 50 percent increasing AUM by 75 percent since 2009. More growth came from investor demand; top firms added clients at a 10 percent greater rate and garnered a larger share of existing clients' assets by 4 percent.
Although there's been more M&A activity this year, "we don't necessarily see an indication that firms are viewing M&A as a preferred means to achieve scale," said Jonathan Beatty, senior vice president, sales and relationship management, Schwab Advisor Services, in a statement.
Beatty commented, "Certainly for some firms it makes strategic sense and current conditions make this a good time to act. But many firms are continuing to follow a multifaceted client growth strategy, by winning new clients and continuing to earn the trust of existing clients, thereby increasing share of wallet. M&A continues to be part of a broad set of growth strategies advisors have to consider alongside such industry best practices as creating operational efficiency and attracting and retaining top talent."
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