The registered investment advisor (RIA) market experienced a slight downturn in deal-making in 2023, marking the first annual decline in merger and acquisition (M&A) volume in over a decade. However, the tide seems to be turning in the first two months of this year as there has been a notable uptick in transactions compared to last year.

DeVoe & Co., a consulting and investment banking firm specializing in RIAs, reported a 20 percent increase in transactions year-over-year, with 49 deals announced year to date versus 41 during the same period in the previous year. InvestmentNews reports that this resurgence follows the 2023 decline, attributed to factors such as high interest rates and global economic uncertainties.

Despite those challenges, interest in RIA acquisitions remains high among private equity firms, family offices, and financial advisers seeking succession plans. Peter Nesvold, a partner at Republic Capital Group, told InvestmentNews that the 2023 dip was a leveling off rather than a softening of M&A activity, highlighting the industry's resilience.

While rising interest rates may have prompted caution among buyers, Larry Roth, managing partner at RLR Strategic Partners, notes that the M&A market's shape appears promising. He observes that buyers are adapting by restructuring earnouts, the payment portion made over a period following the acquisition, to navigate changing economic conditions.

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