Mergers and acquisitions in the investment advisory industry jumped sharply in terms of deal value last month, mostly due to an $11.8 billion deal that dwarfed all others, according to a Fidelity Investments report.

The July report indicated 2019 is on track to set new records in wealth management M&A activity, after a first half that saw historic highs in both the number of deals and the total assets involved. The total AUM involved in July more than doubled from a year earlier, reaching $16.5 billion. The report tracks deals with values of between $100 milion and $20 billion in assets under management.

July’s AUM total was largely due to private equity firm TA Associates putting $11.8 billion into Wealth Enhancement Group. “The deal may position Wealth Enhancement Group to accelerate their M&A activity even further,” Fidelity said.

Wealth Enhancement Group was involved in another transaction in July when it purchased AEPG Wealth Strategies for $1 billion. The other large deal for the month was AmeriLife Group’s purchase of Brookstone Capital Management for $2.35 billion.

“TA Associates is Lightyear Capital’s fourth private equity partner, so the deal also represents a trend towards recapitalization” within the industry, the report sid. “Advisor Group’s sale from Lightyear Capital to Reverence Capital Partners in May is another example of recapitalization, which can be expected to continue as the importance of private equity capital in wealth management M&A grows.”

Fidelity also noted that the M&A activity included deals by minority investor Wealth Partners Capital Group, which completed two transactions within two of their three acquired firms, MAI Capital Management and E.P. Wealth Advisors

Fidelity and others reported that high M&A activity continues to be a hot trend in the financial services industry that can be expected to continue for the rest of the year. Year to date, there have been 75 RIA transactions representing $86.1 billion in assets and seven independent broker-dealer transactions representing $392.0 billion in assets. Compared to last year, the number of RIA transactions went up by 44% and the assets involved in the transacted went up by 68%, Fidelity said.

One independent broker-dealer transaction was recorded in July with the sale of StockCross Financial Services to Siebert Financial Corporation for $1 million.

Source : fa-mag.com