Meanwhile, the average assets per deal is well above the recent baseline, Echelon Partners says.
Merger-and-acquisition activity in the registered investment advisor space declined slightly from the second quarter to the third, but this year's total deal volume is on course to exceed last year's, according to a new report.
The third quarter saw 74 deals in total, just one fewer than in the prior quarter but still the smallest quarterly total in more than a year, Echelon Partners said it found studying mergers, acquisitions and other transactions involving RIAs with more than $100 million in assets under management. Echelon's deal count includes those involving individual financial advisors moving to other RIAs.
Despite the quarterly decline in M&A activity, Echelon suggested that "there are some important signs for optimism," such as large firms continuing to raise capital for acquisitions as well as indications that the fourth quarter's deal tally would be boosted by yet-to-be announced deals that closed late in the third quarter.
"The recent capital raises and solid 3Q24 performance are indicators of ongoing seller supply and acquirer optimism," the company added in the report.
Private equity continued to play an outsized role in RIA acquisitions.
Strategic acquirers -- mainly private equity-backed RIAs -- were behind 85.1% of the deals during the third quarter, while financial acquirers, which were mainly represented by private equity shops themselves, made up 14.9%, according to the report.
In all, the deals in the third quarter represented $6.7 trillion in assets, with 44.6% of the deals representing transactions involving $1 billion or more, Echelon said it found.
Echelon also said that there has been a surge in wealthtech activity, with more than 50 such deals announced in the third quarter, compared to 33 in the second.
Given the latest figures, meanwhile, the RIA space this year is projected to see 330 deals, nine more than last year and trailing only 2022 for the highest yearly count recorded by Echelon.
Average assets per deal for the year are projected to rise to $1.97 billion, which would be 14.1% more than the 2019-to-2023 annual average, though it would fall short of 2021's average of $2.09 billion, Echelon said in the report.