The hottest corner of today’s M&A market is all about catering to wealthy investors.
Wealth-management firms are riding a wave of PE-backed dealmaking and consolidation, as the financial-advisory industry races to manage money for a rapidly expanding market of well-heeled clients with large pools of capital at their disposal.
Defying the broader market’s somewhat bleaker M&A outlook, the deal boom for wealth-focused registered investment advisers highlights an upsurge in the sheer wealth and number of high-net-worth investors, who are worth an estimated $140 trillion in global private assets. Rising demand from wealthy clients seeking investment alternatives is driving more individual investors into the private markets—a historic macro trend known as the public-private convergence.
Wealth management giants like privately held Hightower Advisors, Creative Planning and Wealth Enhancement Group have been leading a push in the past couple of years to gobble up smaller firms and, in some cases, take over big rivals.
Most of the past two years’ biggest deals had backing from money-management giants such as BlackRock, Bain Capital and TPG in a buying binge that shows no sign of slowing down.
“2025 will be a record year of activity in volume and value,” said Barnaby Audsley, senior vice president of Echelon Partners, a specialty investment banker that focuses on the wealth channel.
Echelon has forecast 440 deals will be completed this year by North American-based investors alone, up 31% from 2024. “Even at these record levels only 3% of firms are choosing to transact, and we believe volume should double over the next 10 years as financial advisers retire or choose to partner to achieve greater growth,” Audsley said. “Suffice to say, we are in the early stages of a long-term consolidation cycle.”
Last year witnessed some 366 mergers involving wealth management firms with assets of at least $100 million, an all-time high, according to Echelon data.
Size matters
Institutional investors are placing bets on ever-larger advisory platforms in a bid to scale up even as the industry braces for a shortage of wealth advisers as financial professionals retire over the next 10 years. The number of deals for managers with over $1 billion in AUM is well above historical levels.
The upshot for independent RIAs and related firms is that size matters, spurring a rise in mega-advisory platforms of various types that each manage hundreds of billions of dollars. The dealmaking rush comes as the financial-advisory industry faces an onslaught of demand from wealthy families in the US and around the world seeking out advice in an increasingly complex investment landscape.
“They’re all going to be bigger,” said Jamie Price, CEO of Osaic, a provider of back-office services that in August acquired CW Advisers in an $850 million buyout backed by Reverence Capital Partners. “They can’t stand still in their size if they want to continue to power and grab a hold of the opportunity of this growing wealth in the United States and the shortfall of advisers.”
Scottsdale, Ariz.-based Osaic is expanding beyond its roots as a broker-dealer backing independent commission-based contractors, to gain more wealth advisers who are employees of Osaic and earn fees on the assets they manage. Price said the purchase of Boston-based CW Advisers, with $16 billion in AUM, has accelerated that expansion for Osaic, which says its network of more than 11,000 advisers collectively oversees assets over $700 billion.
Wealth managers and investors say the consolidation wave reflects a push to offer a range of new specialty services under one roof for high-net-worth and ultra-high-net-worth investors who increasingly want exposure to alternative investments, accounting, trust administration and estate planning. Moreover, the industry is rife with independent RIAs who are approaching retirement and need succession plans.
In a landmark deal last March, publicly traded LPL Financial, one of Osaic’s rivals, agreed to pay $2.7 billion for Commonwealth Financial Network, the nation’s largest independently owned wealth advisory firm with $285 billion under management. Last year, Hightower purchased a controlling stake in NEPC for a combination covering $258 billion in AUM; that deal’s sponsors included SEB Private Equity and PE firm Thomas H. Lee Partners.
And in September, TPG-backed Creative Planning, a major US-based independent wealth manager, agreed to acquire Sageview Advisory Group, a retirement-focused RIA previously financed by PE firm Aquiline Capital Partners. Their combined assets under management and advisement are set to total over $600 billion. Creative Planning purchased nine other advisory firms in the past two years.
This year so far, PE investors have already blown through last year’s record-setting pace, financing over $32 billion across 212 wealth-management deals, compared with nearly $29 billion on 249 deals last year, according to PitchBook data.
In this hot environment, valuations are elevated compared with most market segments. Platforms are trading at EBITDA multiples in the mid-teens to low twenties, according to Pat McHugh, managing director and head of investments at Constellation Wealth Capital, a Chicago-based PE firm that closed its debut fund in December with commitments over $1 billion. Such robust valuations are justified, he said, given the growth profile of these companies.
“You have nearly 100% recurring revenues,” McHugh said. “You have high organic growth. You have low leverage in many cases, high profitability, the ability to scale really rapidly and to get quite large, and to have a model in which you really can start to do many more things for clients. And you have a lot more ways to really deepen that client connection.”
Sovereign wealth backing
In one of the latest moves, Ares Management jumped into the fray last week by agreeing to take a minority stake in EP Wealth, a $40 billion wealth manager. The deal, the terms of which weren’t disclosed, marked Ares’ first equity deal in a wealth firm.
And PE firms aren’t the only big institutions financing the bonanza. Sovereign wealth firms have been actively scooping up stakes in money managers. This year in Canada, Mubadala Capital, the Abu Dhabi-based state-run investor, paid C$4.7 billion ($3.4 billion USD) for control of CI Financial, including its US wealth business Corient, which oversees nearly $190 billion. Corient itself then acquired multi-family office Bristlecone Advisors last week, adding another $2 billion in AUM.
Earlier this year, Fisher Investments, which manages nearly $300 billion, took on its first outside investor when Abu Dhabi Investment Authority, along with Advent International, made a $3 billion minority investment. Singapore’s GIC has recently taken stakes in Mercer Advisors and Altruist, a venture-backed fintech firm for RIAs.
Competition is intense to retain advisers before they jump ship to gain new clients in more lucrative arrangements, either with networks like Osaic and LPL or by starting their own so-called breakaway upstarts. In the largest such breakaway to date, a group of more than 100 advisers abandoned Merrill Lynch in September to form a new platform called OpenArc, which got operational support from Dynasty Financial Partners, whose backers include BlackRock and JP Morgan.
Valuations of platforms in the wealth management industry reflect increasing interest from PE and private credit firms beyond just specialty firms like McHugh’s Constellation Wealth. He said he views the influx as a net positive for an industry that is under-capitalized for its growth trajectory and needs more investors.
“In my honest estimation,” said McHugh, “we have a capital shortage for this space, given how high-quality it is from an industry perspective versus some other business lines and industries that have much more private capital activity but maybe lower quality in terms of fundamentals and secular trends.”
Featured image by Drew Sanders/PitchBook News
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