PagnatoKarp learns going it alone has its limits, jumps into the arms of another serial buyer, Cresset, after declaring its independence from HighTower only four years ago
Advisors Paul A. Pagnato and David W. Karp have figured out independence isn't all it's cracked up to be, especially when it comes to succession and tapping into the capabilities of a larger firm.
The $2.2 billion Reston, Va., RIA has just jumped into the arms of Chicago-based Cresset Asset Management after fleeing Merrill Lynch in 2011 for HighTower Advisors LLC -- also a Chicago-based roll-up -- and then going it alone as PagnatoKarp in 2016. See: Fearless Merrill Lynch team breaks away with $1 billion in broad daylight
Cash Deals Rising in RIA M&A
Two of the industry’s most prolific acquirers said on a webinar Tuesday that the meteoric rise in valuations which began in 2019 is showing no signs of slowing in the face of the pandemic, while cash considerations are now the dominant characteristic of deal structures.
The webinar, entitled Fact Versus Fiction: Investigating the “Truth” in Deal Structures, was hosted by RIA management consultant Advisor Growth Strategies and sponsored by BlackRock.
Fidelity reports three slowest months of RIA M&A on record
A new report from Fidelity has put the coronavirus pandemic’s effect on RIA dealmaking in full, bleak view.
According to the RIA custodian’s wealth management transaction report for May, there have been just 30 transactions in the industry through the first five months of 2020, a 45% decrease in the number of deals from 2019, when 55 mergers were completed in that span.
Cash reigns as king in RIA M&A deals
Mergers and acquisitions in the registered investment adviser industry were dominated by cash transactions last year as buyers favored such deals over more expensive and risky equity capital amid historically low interest rates.
M&A activity showed a shift away from equity in 2019, according to the 2020 RIA Deal Room study released last Thursday by Advisor Growth Strategies.
Average valuation for RIA sale jumps to 6.6x Ebitda
RIA valuations soared in 2019, according to a new report from Advisor Growth Strategies.
The RIA consultancy found in a new study, ‘The RIA Deal Room: The Next Generation of RIA M&A,’ that the median average earnings before interest, taxation, depreciation and amortization (Ebitda) multiple paid for an advisory firm jumped 29% in 2019, from a median of 5.1x over the course of 2015-2018 to 6.6x in 2019.
RIA M&A Activity Will Persist Post-Covid-19: Report
The coronavirus pandemic will certainly change the RIA M&A landscape, but recent growth in valuations and projections for how the industry will change suggest potential sellers will have more choice, according to a recent report.
Sixty-six percent of all RIA M&A deals in 2019 involved just 16 “acquisition brands,” compared to 13 in 2018 and 11 in 2017, Advisor Growth Strategies found. Meanwhile, $1.6 trillion in assets under management — and more than $20 billion in total valuation — is projected to “go into motion” in the next five to 10 years, according to AGS’ analysis of 2019 deals and a survey of RIAs conducted in early 2020 about valuation, business management and engaging in M&A. As more RIA owners look to exit, the industry will need more acquirers, AGS says.