If you’ve ever considered selling your practice, 2021 was a great year to do it. A 2019 J.D. Power study found 55 to be the average age of a financial advisor. That, combined with market resilience in early 2020, despite the pandemic, and industry economics showing a record year for asset management in 2020 (McKinsey), created another record in 2021: M&A activity in financial services. Asset management, in particular, showed exceptional growth as well as record industry profitability, with top quartile firms benefiting disproportionately in comparison to others. In 2021, Financial Services deal values totaled $1.1 trillion, eclipsing the 2020 figure ($557.8 billion) by a lofty 106 percent! And, while “multiples for traditional asset managers have been under pressure since 2018, uncoupling from the rising valuations of the broader S&P 500,” the top quartile of publicly listed traditional asset managers traded at an average premium to the overall industry of 50 percent in 2021, with specialized firms commanding even more (McKinsey). Despite the 2021 M&A frenzy being driven largely by record low interest rates and a rush to close deals ahead of proposed corporate tax changes, tailwinds remain despite inflationary pressures and rising interest rates. A recent KPMG survey reported a strong appetite remains for deal making among 75 percent of financial services C-Suite respondents. So, for those still seeking a potential exit, there may be no time like the present. For other advisors, with a longer runway, there are still lessons to be learned from the M&A winners about where to concentrate strategic growth and improvement efforts. And we look forward to digging further into that topic in the next newsletter! Christy Charise Founder & CEO of Strategic Advisor www.strategicadvisor.co
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