The field of mergers, acquisitions and other corporate activity in the US wealth sector has had its share of ups and downs in recent years, affected by rising interest rates, and the countervailing forces that drive deals, such as aging advisors retiring, a desire for economies of scale, technology, and intergenerational wealth transfer.

Merger and acquisition activity in the US registered investment advisor industry has bounced back in the third quarter of 2023 with 86 deals announced, a level not seen since early 2022, according to ECHELON Partners. The data suggests that a cooling of transactions amid higher interest rates has come to an end, at least for the time being.

“We attribute this increase to the continued influence of fundamental forces driving consolidation in the industry and to buyers and sellers gaining greater confidence in the macroeconomic environment,” the firm said in its quarterly report. “Given these trends, ECHELON anticipates that 2023 M&A activity will mirror the trend observed in 2020 and 2021: a relatively quiet Q2, followed by a strong rebound in activity in Q3, which is then exceeded by an even more active Q4.”

While RIAs continue to dominate the overall wealth management buyer market, this quarter’s largest transactions included a “diverse group of RIAs, private equity firms, insurance companies, pension plans and asset managers,” the report said. It noted how Goldman Sachs was a buyer and seller in the largest deals of the quarter, such as buying a chunk of World Insurance Associates while also selling Goldman Sachs Personal Financial Management to Creative Planning. (See an associated story from FWR’s US correspondent Charles Paikert on that Creative Planning deal.)

The average size of deals continues to rise, although there was a slowdown in deals of $1 billion or more of assets under management. Average assets per deal rose 4.3 per cent on a year before. Drivers of this growth included deployment of newly-raised capital by firms such as Mercer Advisors, Corient, HUB International, and CAPTRUST.

ECHELON said it estimates that large wealth platforms raised an incremental figure of about $7.2 billion to pay down debt, boost war chests for deals, and invest in growth.