Private equity-backed dealmaking in the wealth management space continued at a record pace through April 2 and shows no signs of slowing even with the current market turmoil, according to the most recent data from PitchBook and views from M&A practitioners.
Investors backed 43 RIA acquisitions through March 31 of this year, according to data provided to WealthManagement.com by PitchBook, a private equity, M&A and venture capital database and subsidiary of Morningstar. If that quarterly figure keeps up, 2025 would surpass last year’s 163 total deals with private equity or other minority investment backing, as measured by the team.
Starting last Thursday, however, public markets started dropping precipitously as the Trump administration pushes ahead with global tariffs, raising questions about investment strategies and the path of interest rates, which affect borrowing costs. As of Monday afternoon, U.S. markets steadied somewhat (at least for the time being), with the Nasdaq, the S&P 500 and the Dow all relatively flat for the day. The VIX, which measures volatility, stands at 47.25 off an intra-day high of 53.76 and overall at its highest levels since the peak of the COVID-19 crisis.
Whatever happens, going forward, PE-backed deals in the RIA space may prove a resilient pocket due to a combination of secular trends and the key role financial advisors play when markets are rocky, according to industry players.
Dan Kreuter, CEO of M&A and recruiting firm Gladstone Group, said his team does not anticipate any slowdown in RIA dealmaking due to the events of the past week.
“The ‘Trump Slump,’ i.e., equity markets selling off violently and the higher volatility we are experiencing, is certainly a new factor to be reckoned with, and time will tell if it’s a blip or something worse,” Kreuter said via email. “With that said, the key drivers for conversion in the RIA wealth space—succession needs of founder/owners, the synergies of scale, recurring revenue, access to asset holders, need for advice, talent acquisition, et. al.—none of this has changed.”
Rich Gill, a founding partner of RIA investor Wealth Partners Capital Group, said dealmaking could certainly be stymied if the continued disruption causes the country to enter a recession.
“One analogy that comes to mind is back in ‘08/09 when there were four months when we saw an almost complete standstill in RIA dealmaking,” he said via email. “The market then was not nearly as liquid or robust as it is today. However, sellers anchored on previous valuations and were unwilling to sell their business at a perceived discount. Only when sellers reconciled themselves to a ‘new normal’ did we see a restart in dealmaking.”
According to PitchBook, investor-driven acquisitions accounted for about $3.55 billion in assets from January through April 2 between a combination of traditional private equity and minority investors, many of whom do not take a controlling stake. Last year, such investors drove $14.33 billion in total asset changeover.
The PitchBook data tracks with an M&A Activity report put out by DeVoe & Company last week. That firm tallied 75 transactions in the first quarter, up from 65 deals in the year prior, bucking market volatility and higher interest rates.
“Transaction activity in the RIA space seems to have marched forward regardless of market environment,” said Matt Crow, CEO of valuation and advisory services firm Mercer Capital, via email.
Crow noted that there was no slowdown in 2022 despite market strains that saw both equities and fixed income drop.
“This suggests dealmaking is driven by seller demographics (aging partners without a good succession plan), plus steady growth in the number of buyers pursuing the space,” he said. “As long as there are buyers and sellers, there will be transactions.”
Crow added that deal volumes would fall if the current market downturn were to affect the availability of debt financing, such as private credit. But it is “much too early to predict that,” he said.
Crow also pointed to a blog post he wrote earlier this year that tariff policies, in the long run, may lead to stagflation, or an “economic period that simultaneously exhibits high inflation, stagnant economic growth and elevated unemployment.”
Should that occur, he wrote, that would have a negative impact on RIAs. Higher inflation would “keep the cost of financing higher, steeping the path for firms saddled with acquisition-related debt,” inflation would raise labor costs for RIAs to run, and “economic headwinds and volatility in general could cut valuations in financial markets, leading to steep declines in AUM and, of course, revenue.”
While Crow proposed the scenario as hypothetical, he advised wealth managers to stress-test their situation against the possibility.
Gill of WPCG also said that after the Great Recession’s pause, there was a flurry of deals. That could happen again if sellers view the current economic situation as carrying “years of downside risk.”
“Many RIA sellers are older and don’t want to wait out a full business cycle for valuations to drop then possibly come up again years in the future,” he said. “Those dollars have more value to them today than they would in 5+ years. If that’s the case, then it’s entirely possible there is a wave of selling to all types of buyers as sole proprietor RIA owners essentially capitulate and take what they can get at a moment in time.”
Jason Gordo, co-founder and president of Modern Wealth, an RIA founded in 2023 by former United Capital advisors, said the drivers of M&A in the sector are not going away due to market volatility and may actually drive more independent advisors to look to join larger roll-ups.
“The industry has multiple problems,” he said. “One problem we have is an aging advisor population, and the markets don’t stop that. I’m older today than I was yesterday, and that’s not going to change. No. 2, we have a next-generation advisor problem across the industry. No. 3, [advisors need to decide] do you want to be alone, or do you want to be with a team?”
Meanwhile, he said, clients begin to ask more questions about an advisor’s capabilities and bench of talent during volatile times, particularly if they know their advisor is close to retirement age.
Modern Wealth, backed by private equity firm Crestview Partners, does not anticipate a slowdown in dealmaking after bringing on 13 firms since its founding.
“We buy profitable businesses to begin with,” he said. “These are moments in time. This is not a permanent environment that we find ourselves in. Just like bull markets are not permanent, bear markets rarely last for long periods of time.”
Kreuter of Gladstone Group added that bull markets can increase deal premiums, whereas bear markets can depress prices. If the market experiences a prolonged downturn, such as the financial crisis in 2008 and 2009, it may impact sellers, not buyers, “as potential sellers may be hesitant to go to market in a downturn, creating even more scarcity in the available inventory.”
Meanwhile, if the “S&P roller coaster” continues, the truly holistic, best-run advisories may start to separate from those riding the market run.
“Many of the best buyers have built excellent holistic solutions and departments above and beyond the investment story, so market downturns actually play into their strengths,” Kreuter said.
