Schwab Advisor Services Reports Independent RIA Mergers and Acquisitions Activity for First Half of 2011

Revised Methodology for Tracking RIA M&A Activity

Wednesday, August 17, 2011 8:30 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NYSE:
SCHW
"RIA's themselves continue to be the dominant buyer category, demonstrating their growing sophistication in mergers and acquisitions"

SAN FRANCISCO--(BUSINESS WIRE)--Schwab Advisor Services, a leading provider of custodial, operational and trading support for nearly 7,000 independent registered investment advisory firms (RIAs), today released its industry-wide data on RIA mergers and acquisitions activity for the first half of 2011. According to the data, there were 27 M&A transactions involving RIAs, representing approximately $20.8 billion in total assets under management (AUM) acquired in the first two quarters. The AUM for the average deal during the first half of 2011 was $770 million. In contrast, the first half of 2010 yielded 30 transactions representing $12.4 billion in AUM, with an average deal AUM of $412 million.

“Thus far in 2011, we’ve seen a significant leap in the average deal size due to a greater proportion of those with $1 billion or more in AUM, despite a slight decrease in transactions over the same period last year,” said David DeVoe, managing director of strategic business development for Schwab Advisor Services.

The 12 deals in Q2 2011 represented $13.2 billion in AUM and represented a decrease in deals from the 14 deals with approximately $8 billion in AUM reported in the same quarter in 2010. Average deal size increased: the 12 deals tracked by Schwab in Q2 of this year had an average deal size of $1.1 billion, versus $571 million in Q2 of 2010. The dominant buyer category continues to be RIAs which conducted 12 transactions in 2011.

“RIA's themselves continue to be the dominant buyer category, demonstrating their growing sophistication in mergers and acquisitions,” added DeVoe. “It also shows RIAs’ willingness to use M&A as one way to achieve business goals and objectives.”

See the chart below for a comparison of RIA M&A data year-over-year and quarter over quarter for Q2 of 2011.

New Methodology for RIA M&A Data

In Q2 2011, Schwab issued M&A data based on an updated methodology. The chart below reflects the new methodology for each quarter represented in 2010 and 2011. Going forward, Schwab’s M&A data will focus on:

  • Firms that predominantly serve high net worth retail investors
  • Firms with at least $50 million in AUM
  • Breakaway brokers from wirehouses who received consideration for joining an RIA

“We feel the new methodology provides a tighter focus on RIAs who directly serve the HNW client segment and removes institutional RIAs, such as hedge funds, mutual funds and separate account managers,” said DeVoe. “As the RIA industry evolves, we will continue to revisit our methodology and refine it as needed to make it the most relevant for our clients and business partners.”

Schwab Advisor Services Transition Planning Resources for RIAs

Schwab Advisor Transition Services is designed to support advisors through each phase of the transition process including goal setting, evaluating options (internal succession, external sale, and merger or acquisition) and executing a transaction plan.

Schwab’s Transition Services includes Schwab’s Mergers & Acquisition Listing Service, an online database offered to advisors that custody with Schwab. The service connects advisor firm buyers and sellers and enables advisors to maintain anonymity while soliciting interest and collecting information from other advisor firms on acquisition, mergers, or sales. Buyers also can search for investment professionals with books of business who would like to join an RIA firm.

About Charles Schwab

The Charles Schwab Corporation (NYSE:SCHW) is a leading provider of financial services, with more than 300 offices and 8.2 million client brokerage accounts, 1.44 million corporate retirement plan participants, 754,000 banking accounts, and $1.65 trillion in client assets as of June 30, 2011. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. Independent investment advisors are not owned, affiliated with or supervised by Schwab. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and mortgage services and products. More information is available at www.schwab.com and www.aboutschwab.com. (0811-5356)

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Photos/Multimedia Gallery Available: http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6833329&lang=en

Contact:

Charles Schwab
Anita Fox, 415-667-1308
anita.fox@schwab.com
or
Makovsky + Co
Janet Yoo, 212-508-9606
jyoo@makovsky.com

Multimedia Files:

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Industry-wide M&A Activity. Source: Charles Schwab Advisor Services Practice Management Team

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