Evolving Connection Between RIAs and M&As

The connection between registered independent advisor firms (RIAs) and mergers and acquisitions (M&As) is continuing to evolve. A recent report from the RIA Deal Room provides more insight into the most recent changes in this relationship. 


The Biggest Factors Affecting M&As


The report identified several factors that have the most significant impact on mergers and acquisitions. Size is one of them, with larger acquisition platforms experiencing more growth than smaller transactions. The larger transactions were able to harness credibility and scale. At the same time, the trend of M&As leading to a monolith is changing. Increasingly, the merged or acquired companies want to maintain a higher degree of flexibility and autonomy. 


There is also a strong focus on geographically close mergers and acquisitions. A full 65% of sellers preferred a partner that was either local or regional. 


The importance of RIAs having a deeper understanding of the M&A landscape has also increased in the last year. RIAs working with buyers need to understand well the company they are acquiring, while RIAs working with sellers need to understand their end of the process. 


Overall RIAs Have More Opportunities for M&As


With the above trends continuing, RIAs have noticed an increase in the number of M&A opportunities available. The pandemic is changing the business landscape, making it harder for businesses to survive alone. That, in turn, has led to more mergers and acquisitions. 

At the same time, many RIAs are starting to worry that they waited too long to act and take advantage of the M&A opportunities. This is primarily a concern as more markets start to reopen. Overall, RIAs are facing a greater urgency to complete M&A deals. Luckily, the favorable market conditions mean they have more opportunities to do so.