How Rising Interest Rates Call for Fresh Approaches to Wealth Management M&A Strategies
The evolving nature of acquisitions.
Over the last several years, merger and acquisition activity within the financial-advisor industry remained strong, with valuations for registered investment advisory firms in 2021 up 15-25% from a few years ago and hitting an all-time high, according to DeVoe & Company, a leading M&A consultant serving RIAs.
Although the main buyers are consolidators and private equity firms, a combination of older advisors seeking to retire and low-interest rates made financing easier for younger advisors seeking to buy businesses. However, to tamp down inflation, the U.S. Federal Reserve is on track to aggressively hike interest rates several basis points at various points in 2022. These increases could signal the end of the era of ultra-cheap money that helped fuel the period of M&A activity.
This whitepaper discusses how acquisitions may evolve in the short and intermediate-term, and the steps buyers and sellers must take to ensure deals go through.