Mergers and acquisitions continue to set records in 2026, with global deal value reaching a record $2.8 trillion in the first half of the year, according to LSEG, and FINTRX counting 225 RIA transactions announced through September, surpassing all of 2025 in just three quarters.
A big percentage of M&A deals in the wealth management space are acquisitions of smaller firms, as risk aversion remains a driving factor in expansion. Buyers are opting to grow by adding smaller entities with strong business operations, technology-driven processes, and sound legal and regulatory standing.
Technology plays a prominent role in buyers’ decision-making process, especially with the quick evolution of and dependence on emerging technologies. In addition to seeking out tech-driven purchases, buyers are particular about the symmetry with which those technologies have been integrated into the day-to-day business.
Private equity-backed buyers account for a large portion of acquisitions, completing 91 of the 120 RIA deals in the second quarter, an all-time high. They have significant capital to deploy, are building scaled platforms through serial acquisitions, and place a premium on growth, strong management teams, and next-generation leadership.
With the acquisition-friendly market, buyers face significant competition acquiring target firms that can contribute to their growth plan. Buyers must make compelling offers with seller-friendly purchase terms since target firms can afford to be selective.
Activity cooled in the third quarter, but analysts do not see the market slowing significantly anytime soon as global economics and politics remain volatile. For buyers, risk aversion is a driving factor behind purchase decisions, and several key factors must be considered when exploring the purchase of a target company.
Buyers’ M&A Checklist
- Define your strategic objectives, target profile, valuation range, and financing plan
- Execute an NDA and negotiate a letter of intent (including price, structure, exclusivity, and closing conditions)
- Conduct financial due diligence: revenue quality, client concentration and retention, normalized earnings, and liabilities
- Evaluate operations: key personnel, vendor and client contracts, and business continuity
- Assess technology and cybersecurity: system integration, data privacy, incident history, AI tools, and vendor risk
- Review legal and regulatory standing: registrations and filings, exam history, enforcement matters, litigation, complaints, and compliance policies
- Determine whether client contracts require consent or are affected by an assignment
- Confirm retention of key employees and the enforceability of restrictive covenants
- Negotiate deal terms: price mechanics, earnouts, escrow or holdbacks, representations and warranties, and indemnification
- Plan post-closing integration for clients, staff, technology and compliance
Sellers with a strong foundation of operational resiliency, cohesive tech integration, and a demonstrable plan of succession, especially a succession plan that clearly shows a strong pool of young talent primed for succession, have a clear advantage over firms who do not have these features. Jacko Law Group discusses this topic more in this blog post titled Succession Planning: Curbing the Exodus of Next Gen Talent.
Firms considering a sale should ready the business to meet the needs of potential buyers. In addition to working towards optimal business operations, a strong workforce, and adapting to today’s technology-led industry standard, sellers or potential sellers should ensure that legal or regulatory issues are addressed before exploring a merger or acquisition. Any issues that are still unresolved should be disclosed to the buyer.
Sellers’ M&A Checklist
- Clarify your goals, timeline, and post-sale role, and engage legal, tax, and financial advisors early
- Resolve open regulatory or exam issues, update Form ADV and policies, and confirm books and records are complete
- Document your succession plan, identify successors, and put retention and equity arrangements in place for key people
- Prepare clean financials, normalized earnings, and clear client and revenue data
- Document processes, test business continuity, strengthen cybersecurity, and streamline your technology
- Review client contract assignment and consent provisions and plan your approach to consents
- Organize a data room with contracts, licenses, filings, and policies
- Evaluate buyers beyond price: culture, ownership, integration plans, and earnout risk
- Review the LOI and deal terms carefully: exclusivity, price adjustments, indemnification, tax treatment, and closing conditions
- Plan communications to employees and clients
Mergers and acquisitions have become a favorable avenue for growth with bigger firms purchasing smaller to mid-sized firms to grow with minimal risk. Both buyers and sellers will benefit greatly from making necessary adjustments in advance of a transaction, performing thorough due diligence, and understanding deal terms well.
If you are considering an M&A transaction, either as a buyer or seller, it is important to understand the nature of the transaction as it pertains to your industry, your firm, and the surrounding circumstances. Each transaction is different and carries benefits and potential risks if not reviewed and addressed properly. For assistance with the strategic, legal, and regulatory aspects of your merger or acquisition, contact us today at 619.298.2880 or email [email protected].
