Interest remains
“It’s still an attractive space,” Levitt said. “There’s recurring cash flows, a need for financial planning and investment management as people age and it’s a business where revenues can go up with the market even if a company doesn’t add new clients.”

In addition, private equity capital remains abundant and “needs to be put to work,” Levitt noted, while new entrants such as insurance companies keep coming into the market, increasing competition and pushing up demand for a limited number of buyers.

Even smaller RIAs are benefiting, Levitt said. Park Sutton is representing two RIAs with around $300 million in assets under management and each firm has drawn at least 15 offers, according to Levitt. “There are still bidding wars,” he said.

To be sure, “there are no guarantees,” Levitt cautioned, conceding that a prolonged market decline could “spook” the M&A market. 

But even quality firms which may not have considered a sale before the boom of the past several years may not be able to complete internal transactions, Levitt argued, because of the disparity between the high multiples the firm may command and what junior executives are able to pay.

A recession could bring valuations down for firms that “don’t meet quality criteria,” Levitt said. Nonetheless, there remain “a lot of deals yet to come,” he predicted.