The Most Overlooked Segment of the Advisor M&A Market
Large mergers and acquisitions dominate the industry news, leading many to believe that the bulk of transactions occur only at the top level. It also leads many to conclude that a mass consolidation is taking place and could be nearing its peak. Therefore, M&A activity cannot continue to accelerate year-over-year at its current pace. The truth is, the bulk of the industry is comprised of solo and small team practices (i.e. under $500MM in AUM) who also engage in M&A, sometimes at even higher frequencies than the billion-dollar conglomerates. These firms aren’t showing signs of slowing down their M&A activity any time soon, leaving plenty of energy behind the financial advisory M&A sector for years to come.
Our firm, PPC LOAN, offers financing up to $20 million to support mergers, acquisitions, and partner buy-ins/-buy-outs for firms of all sizes. Most commonly, this includes firms under $500MM in AUM that don’t have access to the internal resources of larger firms or support from the private equity market. The M&A activity for firms of this size is incredibly vibrant, with numerous deals occurring every month, regardless of market trends and conditions.
According to industry stats, the bulk of solo advisors are over 60 years old and are actively looking or soon will be looking for a successor or a larger firm to tuck into until they are ready to retire. Many small team practices have tapped into the market of solo practitioners to grow market share in a specific region or client group and to leverage the knowledge and expertise of seasoned advisors. There are also several solo and team practices merging to combine resources, build scale, and better leverage technology to adapt and grow in a competitive M&A landscape. They are also actively working to build an ownership path for their promising young talent – advisors and staff alike – which is creating a new market and greater continuity for both staff and clients. This continuity and buy-in from staff are also driving practice values and profits up, leading to bigger payouts for retiring advisors compared to waiting until they are ready to retire to offer ownership or sell outright.
Bottom line is that the M&A activity in the financial advisor industry happens at all levels, with firms of all sizes. Factoring in the aging demographics of advisors, the rapid change in technology that is pushing firms to merge and combine resources, and the appeal of ownership for both senior advisors and junior staff, the M&A sector is not likely to wane anytime soon. Instead, it will likely continue at a relatively steady and robust pace, with occasional ebbs and flows, but not ever declining to levels experienced prior to the financial crisis.
Our firm, PPC LOAN, offers financing up to $20 million to support mergers, acquisitions, and partner buy-ins/-buy-outs for firms of all sizes. Most commonly, this includes firms under $500MM in AUM that don’t have access to the internal resources of larger firms or support from the private equity market. The M&A activity for firms of this size is incredibly vibrant, with numerous deals occurring every month, regardless of market trends and conditions.
According to industry stats, the bulk of solo advisors are over 60 years old and are actively looking or soon will be looking for a successor or a larger firm to tuck into until they are ready to retire. Many small team practices have tapped into the market of solo practitioners to grow market share in a specific region or client group and to leverage the knowledge and expertise of seasoned advisors. There are also several solo and team practices merging to combine resources, build scale, and better leverage technology to adapt and grow in a competitive M&A landscape. They are also actively working to build an ownership path for their promising young talent – advisors and staff alike – which is creating a new market and greater continuity for both staff and clients. This continuity and buy-in from staff are also driving practice values and profits up, leading to bigger payouts for retiring advisors compared to waiting until they are ready to retire to offer ownership or sell outright.
Bottom line is that the M&A activity in the financial advisor industry happens at all levels, with firms of all sizes. Factoring in the aging demographics of advisors, the rapid change in technology that is pushing firms to merge and combine resources, and the appeal of ownership for both senior advisors and junior staff, the M&A sector is not likely to wane anytime soon. Instead, it will likely continue at a relatively steady and robust pace, with occasional ebbs and flows, but not ever declining to levels experienced prior to the financial crisis.