RIA M&A Set New Records in Volume and Multiples as Industry's Success Continued Despite Challenging Conditions

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Advisor Growth Strategies' 2023 RIA Deal Room report shows a recalibration in dealmaking

PHOENIX, March 28, 2023 /PRNewswire/ -- In 2022 private capital continued to chase investments in the independent wealth management space and capital-backed RIAs grew through continued acquisitions, but the M&A tone changed as the industry grappled with rapidly changing requirements to remain competitive, according to The 2023 RIA Deal Room report from Advisor Growth Strategies, a management consulting and transaction advisory firm launched in 2009 to help owners advance their financial advisory firms. The fifth annual edition of this one-of-a-kind report, sponsored by BlackRock includes qualitative insights from dealmakers on what is ahead in 2023, a one-of-a-kind analysis based on transactions closed in 2022, and insights from the Advisor Growth Strategies 2023 RIA and Buyer Pulse Surveys.

AGS (PRNewsfoto/Advisor Growth Strategies)
AGS (PRNewsfoto/Advisor Growth Strategies)

"On the heels of its tremendous success in 2021, the RIA channel was highly optimistic going into 2022, but that optimism shifted as the markets declined and interest rates climbed. We still saw new records set in RIA M&A in terms of volume and multiples, but the story became nuanced as valuations fell due to lackluster financial results," said Brandon Kawal, Principal at Advisor Growth Strategies. "Last year we saw considerable evolution in sourcing, negotiating, and closing transactions as acquirers sought to remain competitive in an uncertain market and expectations recalibrated towards more balanced deal structures."

Findings from the 2023 RIA Deal Room report include:

  • Private capital continued to chase investments in the independent wealth management space and capital-backed RIAs grew through continued acquisitions as the median adjusted EBITDA multiple increased, but the rate of increase slowed.

  • Despite the challenges, 2022 set another new record for transaction volume as buyers expressed a cautiously optimistic tone for the year ahead but were modifying deal structures.

  • Transaction volumes could decrease in 2023 relative to 2022, with dealmakers noting more headwinds and longer deal times.

"Last year was interesting on the M&A front, to say the least, and we think there are plenty of good deals to be made in 2023," added John Furey, Managing Partner at Advisor Growth Strategies. "The influx of capital from private equity bodes well for continued M&A activity, whether investments are made directly or through other firms. Teams seeking enhanced resources and business continuity solutions through a transaction still have a fantastic opportunity to find a great result, but they may have to work harder to get it."

"As advisors evaluate their options and any possible implications in becoming active in M&A, it is paramount that they take the time, alongside their team, to first get their own house in order by having a clear value and growth story and being able to explain their WHY," said Liz Koehler, Head of BlackRock's US Wealth Advisor Insights Team. "In working with thousands of advisors across the world, we find that focusing on these activities is immediately accretive as it not only prepares the firm for future deal activity, but may also increase valuations, team morale, business efficiency, organic growth and retention."

Receive your copy of "The 2023 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 valuation and deal structures. Register to join using the links below:  
The Future of Integrated RIA M&A, Wednesday, April 12th 1:00 PM (ET)  
The Future of Investing in the RIA Space, Tuesday, April 18th 1:00 PM (ET)

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.


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SOURCE Advisor Growth Strategies