The first half of 2013 closed with 18 completed merger and acquisition deals in in the RIA industry, totaling $15.4 billion in assets under management. The figure is the lowest on record since the first half of 2008, as organic growth proved the main driver of business expansion, according to new figures from Charles Schwab.

The first half of 2011, for example, ended with 27 deals totaling $20 billion in AuM, while 25 deals totaling $36 billion in AuM were completed during the same time period in 2012, the data shows.

Deal flow in the second quarter of this year lost pace, with just five completed transactions. There was, however, an increase in the average deal size from $447 million in Q1 to $1.9 billion in Q2, Schwab said.  

The data, compiled by Schwab Advisor Services, reflects firms being sold with AuM exceeding $50 million as of June 30, 2013.

“Fewer mergers and acquisitions are a likely outcome of the rapid rate of organic growth that advisors are currently experiencing,” said Jonathan Beatty, senior vice president, sales and relationship management at SAS.

In terms of deal volume, M&A activity peaked in 2010, with 70 deals worth $62.7 billion in total acquired AuM. Average deal size, meanwhile, was highest in 2009, at $1.7 billion. If, for the rest of this year, M&A deal volumes continue at the same pace logged in the first quarter, final levels will be on par with those seen in 2009 – and, potentially, considerably lower in terms of acquired AuM (2009: $60.7 billion).

“Advisors considering ownership transition may be focusing on creating more value in their firm leading them to delay a deal for a few years. However, M&A continues to be an important option for those looking to quickly gain scale, access new markets, or enhance their capabilities,” Beatty added. 

M&A: a growth strategy for RIAs?

Last month, Schwab said - in its RIA Benchmarking Study - that while client referrals and “centers of influence” emerged as a primary channel for RIA growth, some firms are also looking to non-organic means - particularly, by acquiring another firm. Indeed, some 25 per cent of firms managing between $100 million and $1 billion in AuM are “actively looking,” both surveys found.

“The good news is that advisors have more access to capital, which has enhanced their ability to invest in new capabilities and hire top talent,” Beatty continued. “For some advisors, M&A is a good alternative to building out their offer in-house and can help the firm get to a solution faster.”

Year-to-date, RIAs have overtaken strategic acquiring firms as the dominant buyers, representing half of deals. This compares to last year's data, which indicated that the latter category made up 55 per cent of all deals but has now slipped (as at June 30, 2013) to 39 per cent. The “other” segment represents 11 per cent of deals, while there has been no M&A activity among regional or national banks thus far in 2013.

In April, Pershing said in a report that there were a number of M&A deals among individual RIA firms in 2012; 37 per cent of all deals consisted of an RIA entering into a “one-off” transaction with another RIA, or an RIA making a series of acquisitions.

“The biggest trend in M&A is same-model marriages - RIAs rolling into other RIAs instead of into consolidators,” Mark Tibergien, chief executive of Pershing Advisor Solutions, said at the time. 

Pershing's data clashed with findings from Schwab's 2012 M&A RIA data, which showed that RIAs completed far fewer acquisitions in 2012 than 2011 while national acquiring firms had ramped up their buying.