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Data Confirms Red Hot M&A Market In Wealth Sector

Editorial Staff, October 12, 2021

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If there was any doubt, fresh figures confirm how busy a period it has been in the North American wealth management sector as far as mergers and acquisitions are concerned. Figures show the central role that private equity is playing in some deals.

Latest data from ECHELON Partners, an investment bank and advisory firm working with wealth advisors, confirms what regular news flow has suggested: North American industry mergers and acquisitions are running hot.

The past few weeks have seen TA Associates agree to make a “strategic growth investment” in Caprock, the multi-family office with more than $7.5 billion of assets. That announcement came a few days after Sanctuary Wealth, a group of advisory businesses, bought a stake in InnoVise Family Wealth Advisors, a multi-family office. Tiedemann Group, an MFO, agreed to merge with London-based Alvarium, another MFO. The deal extends Tiedemann’s reach around Europe and Asia, among other places. Cresset Asset Management has inked a deal with Berman Capital Advisors ($4.7 billion AuM), building a multi-family office with $20 billion of assets under management.

There were 78 deals announced in the third quarter of this year – a new all-time high, beating the previous quarterly record set in in the first quarter of this year of 76, ECHELON said in a quarterly report.

Large strategic acquirers, many of which are backed by private equity, continued their status as the most active dealmakers in the wealth management industry. And acquirers are looking outside the US as well as in a more competitive environment. 

“Spurred by opportunity as well as increasing competition, strategic buyers have ramped up dealmaking activity in the UK. They have been followed by prominent US private equity firms also looking to establish a presence in the region,” the report said.

The firm said it expects this year to outpace the total 2020 deal count by a “significant margin” as strong secular trends (consolidation, competition, succession planning) and supportive capital markets (cheap debt, heightened corporate cash balances, significant private equity dry powder) continue to fuel dealmaking. 

The report said potential tax hikes from the US government – such as for capital gains – could also explain why firms are racing to complete transactions. 

There were 12 direct transactions in the third quarter (focused on building or investing in a wealth management M&A platform), such as the aforementioned TA Associates investment in $7.5 billion AuM Caprock Group, Lightyear's investment in UK-based Wren Stirling, and Onex's investment in Wealth Enhancement Group. The report said that most deal activity involving private equity capital came from their portfolio companies, such as M&A powerhouses Mariner Wealth (backed by Leonard Green) and Mercer Advisors (backed by Oak Hill). 

What is striking is that so far, most of the M&A action has been in the RIA space, while multi-family offices haven’t quite matched the pace. However, it appears that momentum in the MFO space is building. Among deals focused more on the ultra-high net worth end of the street have been Tiedemann (Presidio, Threshold, Alvarium), Pathstone (Federal Street, Convergent, Cornerstone) and Fiduciary Trust International (Athena Capital Advisors).

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