Don’t overlook an important piece of RIA M&A: the story you have to tell

By Jody Lowe | 02/22/24

With RIA merger and acquisition activity expected to continue at a robust rate in 2024 (see sidebar), expect to see a lot more deal-related news in publications like Barron’s Advisor, CityWire RIA and RIA Biz.

This coverage is an opportunity for growing RIAs to tell their stories. With each liftout and acquisition, firms have an opportunity to reiterate core messages about what makes their firm different—both for the advisors they want to add to their line-up and for the clients those advisors serve. Firms with distinct strategies, strong cultures and leadership advantages should seek to trumpet their story with each deal done. It’s no surprise that RIA communications pros get as excited as we do when anticipating deal news. It is an opportunity to elevate firm leadership and get in front of other firms who may also want to sell.

Start with message

Every deal announcement is an opportunity to reiterate your firm’s core strengths. In any engagement, we start with a message triangle to highlight three differentiated brand truths. Craft a message triangle for the deal, too, that mirrors your firm level messages but points out the synergies and advantages of the transaction. Take time to talk to the deal teamabout their pro forma to get your arms around why the deal makes sense and what the combined firm is anticipated to do.

RIA M&A Activity in 2023

Highlights of the year, as sourced from reports by DeVoe & Co. and Echelon Partners:

A 5% decrease in the number of total transactions (251 in 2023 versus 264 in 2022) broke nine successive years of record M&A activity—but was almost triple the transaction volume of five years ago. 2024 forecast range: 240 to 270 transactions. (DeVoe)
Almost 90% of M&A transactions were executed by repeat acquirers. (DeVoe)
Average assets per transaction: $1.7 billion, 2.8% more than in 2022. (Echelon, which counted 321 transactions, down 6% from previous year).
The number of mergers and acquisitions involving wealth managers with at least $1 billion in assets: 116 deals. Six acquirers were responsible for 23% of those larger deals. (Echelon)
RIAs accounted for 228 of the deals, with assets representing $466 billion. Private equity buyers announced 30 direct investments, with total transacted assets surging to $2.4 trillion vs. $407 billion in 2022. (Echelon)

Cater to all constituencies

Deal announcement plans should go far deeper than simply announcing the deal close. Comms pros need to anticipate all the people impacted by the deal and think through what they will need to know…and when. We create a communications matrix identifying each constituency and what information they need, a timeline to deliver it and who will tell them. From there you can identify the core communications materials—employee letters for both the acquired firm and the acquirer, news releases, client communications—as well as all of the collateral information that will need to be updated—website, signage, business cards, etc.

Client communications requires careful thought and are often driven by legal considerations. Depending on the nature of the transaction, a consent form may need to be signed before the deal can be done. Firms will want to prioritize clients based on the nature of the relationship. A large client may need more information and a personal phone call while other clients can be informed via letter or email.

Don’t forget other key partners—accountants, bankers, consultants, landlords—who will also want to learn from you about the transaction. The broader community including philanthropic partners should also be on the list.

Telling your best story

While industry media loves to cover a deal, there can be an advantage to sharing your news early or on embargo with media organizations that know you well and are familiar with your story. Giving a key media organization a heads-up a day or so early can also give them extra time to talk with your team about the transaction and even arrange an interview with leaders at both the acquired firm and the acquirer. It helps if you can schedule a joint interview to deliver consistent messages.

Lowe Group has extensive experience in helping RIAs tell their differentiated stories. Send us a note to learn more.

The man bites dog story: The RIA that’s growing organically

If you’re an RIA succeeding at growing organically, you have your own story to tell—and it’s increasingly novel to a trade media swamped with acquisition announcements.

As Mark Hurley noted in his December 2023 whitepaper Welcome to the Jungle: The Next Phase of the Evolution of the Wealth Management Industry, organic growth success has evaded many firms. “70% of the industry’s growth was from asset inflation and a major custodian analyzed the firms it served and found that the AUM of more than 70% were contracting net of market appreciation,” wrote Hurley, who believes that much of the industry has been “sleepwalking.”

“Many firms effectively stopped marketing. Why care about organic growth when your EBITDA is growing 15% to 20% per year without having to add new clients?” he asked.

Organic growers, jump out with your success story now. Hurley predicts that firms of all sizes soon will return to emphasizing organic growth as essential to maintaining and building their profitability and enterprise value.

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The man bites dog story: The RIA that’s growing organically

If you’re an RIA succeeding at growing organically, you have your own story to tell—and it’s increasingly novel to a trade media swamped with acquisition announcements.

“Many firms effectively stopped marketing. Why care about organic growth when your EBITDA is growing 15% to 20% per year without having to add new clients?” he asked.