Succession Headaches Are Fueling M&A Activity

The RIA industry is starting to look like a Presidents’ Day car lot: deals, deals, deals.

Last year marked a record period for M&A activity, with 322 transactions announced, an 18% increase year over year, according to DeVoe. While the surge reflects sustained interest in the space, it also underscores persistent challenges RIAs face, particularly around succession planning and organic growth. “When sellers were asked about the primary drivers behind their decision to sell, the top two responses were growth and liquidity,” company founder David DeVoe said.

What’s the Plan?

A looming wave of retirements is a major contributor, especially among owners who lack a clear transition strategy. “Succession remains one of the industry’s most significant unresolved risks,” DeVoe told Advisor Upside. Nearly two-thirds of firms report their next-generation talent is not yet ready to take over leadership, and roughly half of recent transactions involve founders moving toward retirement.

Growth pressures are driving a similar share of deals. Many RIAs hit a wall between $500 million and $3 billion in assets under management, said Joe Duran, managing partner of Rise Growth Partners. At that stage, firms face a choice: invest internally and absorb short-term margin pressure, or partner with an organization that already has the infrastructure in place. “Founders need to be brutally honest about what they’re trying to achieve,” Duran said in an email, adding that deals driven by fatigue, rather than strategy, often lead to regret.

The report also found:

• Wealth Enhancement, Merit Financial Advisors and Beacon Pointe were the top acquirers last year, conducting 17, 13 and 12 transactions, respectively.
• The number of sellers increased, but the buyer pool narrowed, dropping 19% from the previous year. Also, only 8% of acquirers last year were first-time buyers, down from 14% the previous year.
• Consolidators, serial acquirers with M&A as their core strategy, accounted for 51% of all RIA acquisitions, up from 45% in 2024.

Private Affair. Many of these buyers are backed by private equity, though plenty of RIAs have avoided the aggressive gut-and-flip strategies PE firms often deploy in industries like retail, media and healthcare. “In addition to the client value of the business model, RIAs provide consistent and growing revenue streams, resilient cash flow and long-duration client relationships,” DeVoe said.

Looking ahead, deals aren’t expected to slow, further underscoring the difficulties RIAs have with succession planning and growth. “Assuming general conditions remain consistent, we see M&A activity continuing to accelerate into 2026 and for several years to come,” he said.