After a record-breaking year for RIA deal volume that “felt like high tide for M&A,” consultancy Advisor Growth Strategies (AGS) predicted in a new report, released Monday, that “the stage is set for what looks to be a busy 2025.”
Citing Fidelity Investments data, AGS noted in the seventh edition of its annual report, “The RIA Deal Room: Navigating the High Tide,” there were 239 transactions in 2024 and a record-setting median valuation of 11x.
Although the new record for median valuations signals a high tide, it’s not lifting all boats now, because the market is more crowded, increasing the difficulty for buyers and sellers to stand out, AGS Partner Brandon Kawal told WSR.
In the report, AGS warned about “saturation discounts,” saying, “Professional buyers, business brokers, recruiters, and investment bankers have deployed sales tactics to drive M&A awareness."
The report said 96% of RIAs who responded to AGS’s recent survey said they were contacted at least twice monthly by someone looking to discuss M&A, an increase from 68% in 2024.
Kawal pointed to the recent announcement by La Jolla, California-based independent RIA AlphaCore Wealth Advisory that it’s acquiring Callan Capital, a San Diego-based wealth management firm with $2.4 billion in assets under advisement, in a transaction the firms said is expected to close in the second quarter of 2025.
Those two firms had a “long-standing relationship and Callan was really looking to find a more creative partner, which is a theme we discuss in the report—how firms must be more creative to compete today given the market saturation,” Kawal told WSR.
Kawal pointed to five other key themes cited in his firm’s report, which was sponsored by BlackRock.
First, “larger firms remain a target,” according to Kawal, but there is “newer interest in the sub $1 billion AUM range, driving up competition for ‘smaller’ firms.”
He continued, “Expectation mismatch is costly for both parties – there is clear evidence of who is achieving premium valuations and why, and buyers need to be focused on what solutions they can offer and demonstrate their capabilities.”
Meanwhile, “for those considering raising capital, minority economics does not equal minority control,” Kawal told WSR. “Motivations must be clear. There may be a failure to launch as more capital providers enter the picture, and there may be a failure to retain if they can’t successfully integrate and execute.”
Kawal went on to call integration the “new playbook, as evidenced by the highest volume acquirers in the space,” in line with the firm’s statement in a news release that the “most active acquirers are now ‘single-brand’ integrators, prioritizing long-term value creation over fragmented ownership.”
As the final key theme, Kawal told WSR, “The critical message for firms looking to build the next platform or firms preparing to go to market is to focus on true business building.”
In 2024, AGS “highlighted the resilience and permanence of RIA M&A,” said John Furey, Managing Partner at the consultancy.
“With market concentration putting downward pressure on the industry, many firms face organic growth challenges and must decide to build independently or partner,” according to Furey. “Tremendous opportunities for M&A exist, but the market is more sophisticated, so the stakes are higher.”
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jeff.berman@wealthsolutionsreport.com.
