On Pace For Record M&A In 2017, RIAs Hit The Pause Button In Q4: TD Ameritrade FA Insight Report

Advisory firms were on pace last year to set new records in merger and acquisition activity until they hit the pause button in the fourth quarter, as lawmakers' efforts to overhaul the tax code led to a surge of client meetings, according to the latest FA Insight M&A Activity Update on advisory firm M&A trends. FA Insight industry benchmarking research is a service provided by TD Ameritrade Institutional. 1

M&A activity was strong in the first three quarters of 2017, with the number of deals on pace to beat 2016 results, but a halt late in the year resulted in the number of deals targeting independent advisory firms falling by 10, or 13 percent, to 70 deals last year versus 2016.

Numerous forces may have contributed to the slowdown, but many advisors told FA Insight they fielded a surge in client calls and meetings concerning the impact of a sweeping tax bill. At the same time, some acquirers that have engaged in multiple deals paused to secure new capital.

While 2017 marked the second straight year of falling deal numbers, it was still the third-highest year on record. The total volume of assets acquired, moreover, rose by 32 percent to $114 billion in 2017 compared with 2016, also the third highest on record. Average deal-size increased by 35 percent to $434 million from 2016.

Advisory firm M&A activity has been robust in recent years, fueled by growing demand for succession solutions among aging principals, healthy firm profits and rising financial markets. The latest numbers suggest buyers are targeting larger firms, said FA Insight, which has been tracking industry M&A activity since 2000. A growing number of RIA acquirers are choosing to "move upstream" and pursue bigger targets or have turned to M&A as their primary growth strategy.

"Advisors took care of their clients during a time of uncertainty, but we expect M&A activity to resume its recent, heightened pace in 2018," said Vanessa Oligino, who as director of Business Performance Solutions at TD Ameritrade Institutional oversees FA Insight. "Indeed, we've already seen 12 transactions announced just in the first three weeks of January."

The findings of the latest FA Insight M&A Activity Update were first announced at TD Ameritrade Institutional's annual advisor conference, 2018 National LINC, in Orlando, Fla.

FA Insight gathers transaction data from news outlets, press releases and other secondary research sources. Its M&A database includes publicly announced transactions involving the acquisition or merger of an independent advisory firm serving households or individual clients, and which manages at least $50 million in assets or generates at least $500,000 in annual revenue. Internal transitions of ownership and the movement of advisor teams are not included.

To see or download a copy of the report, click here.

FA Insight is a product of TD Ameritrade Institutional, division of TD Ameritrade Inc. FA Insight is a trademark owned by TD Ameritrade IP Company, Inc.

About TD Ameritrade Institutional TD Ameritrade Institutional is a leading provider of comprehensive brokerage and custody services to more than 6,000 fee-based, independent RIAs and their clients. Our advanced technology platform, coupled with personal support from our dedicated service teams, allows investment advisors to run their practices more efficiently and effectively while optimizing time with clients. TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation.

About TD Ameritrade Holding CorporationTD Ameritrade provides investing services and education to more than 11 million client accounts totaling more than $1 trillion in assets, and custodial services to more than 6,000 registered investment advisors. We are a leader in U.S. retail trading, executing more than 700,000 trades per day for our clients, nearly a quarter of which come from mobile devices. We have a proud history of innovation, dating back to our start in 1975, and today our team of 10,000-strong is committed to carrying it forward. Together, we are leveraging the latest in cutting edge technologies and one-on-one client care to transform lives, and investing, for the better. Learn more by visiting TD Ameritrade's newsroom at www.amtd.com, or read our stories at Fresh Accounts.

Brokerage services provided by TD Ameritrade, Inc., member FINRA / SIPC

1. TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD Ameritrade Holding Corporation

Source: TD Ameritrade Holding Corporation

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