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2013 M&A RIA Industry-wide Data Charts (courtesy Of Schwab)

According to industry-wide registered investment advisor (RIA) merger and acquisition (M&A) data compiled by Schwab Advisor Services, the first half of 2013 closed with 18 completed transactions, totaling $15.4 billion in assets under management (AUM), which is the lowest on record since the first half of 2008. In comparison, the first half of 2011 ended with 27 deals totaling $20 billion in AUM, while 25 deals totaling $36 billion in AUM were completed during the same time period in 2012. Deal flow in Q2 2013 slowed with only five completed deals, but there was an increase in the average deal size from $447 million in Q1 to $1.9 billion in Q2, 2013.

"Fewer mergers and acquisitions are a likely outcome of the rapid rate of organic growth that advisors are currently experiencing," said Jonathan Beatty, senior vice president, sales and relationship management, Schwab Advisor Services. “Advisors considering ownership transition may be focusing on creating more value in their firm leading them to delay a deal for a few years. However, M&A continues to be an important option for those looking to quickly gain scale, access new markets, or enhance their capabilities.”

A Possible Strategic Growth Strategy for Advisors

According to the 2013 RIA Benchmarking Study 1 from Charles Schwab, among firms managing $100 million to $1 billion in AUM approximately twenty-five percent (25%) are actively looking to acquire another firm.

“The good news is that advisors have more access to capital, which has enhanced their ability to invest in new capabilities and hire top talent,” added Beatty. “For some advisors, M&A is a good alternative to building out their offer in-house and can help the firm get to a solution faster.”

Schwab Advisor Services’ RIA M&A industry data is provided as part of the firm’s continued commitment to advancing the interests of RIAs. This includes supporting advisors through each phase of the process of starting, running, growing, and exiting a business.

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