Plenty of action, particularly on the breakaway front
Acquisitions of registered investment advisory firms soared in the first quarter, with wirehouse defections accounting for nearly half the deals. And the deals themselves are getting bigger.
In the first quarter, 17 mergers or acquisitions took place, involving a total $24 billion in invested assets. Of those deals, nine involved advisers' leaving a wirehouse to join a national acquiring firm. Three of those deals involved more than $1 billion in assets under management. The next-biggest market participants were RIA firms, which conducted six deals in the quarter.
The figures come from Schwab Advisor Services, a unit of The Charles Schwab Corp. which collects deal information from a variety of sources, public and private.
“We are cautiously optimistic about the rebound,” said Jon Beatty, a senior vice president of Schwab Advisor Services. He attributed the surge to an improved market, as well as pent-up demand after market volatility in the second half of 2011 pushed buyers and sellers to the sidelines.
The movement of wirehouse advisers to acquiring firms is a building trend, but it is still subject to ebbs and flows, he said.
The number of deals overall is well ahead of 2011's pace, when $43.9 billion changed hands in 57 transactions for the entire year. The average deal size jumped up in the first quarter to $1.4 billion in managed assets, up from the full-year averages of $798 million in 2011 and $895 million in 2010.
One big deal in the quarter accounted for more than half the total assets that changed hands. It was the purchase of an equity stake in one of the industry's biggest RIA firms, Veritable LP, by Affiliated Managers Group Inc. Veritable manages about $10 billion for high-net-worth clients. Affiliated did not report how big a share it purchased or the price.
On Wednesday, AMG announced that it is purchasing a majority stake in Yacktman Asset Management Co.
