The Shift in Private Equity’s Focus on Registered Investment Advisor Firms
Private equity’s appetite for registered investment advisor (RIA) firms continues to grow, with a subtle yet powerful trend suggesting a shift in focus. Traditionally, PE funding has been concentrated on mega-aggregators and RIAs with billions in assets under management. However, recent data from AdvizorPro research indicates a change in this pattern.
In the year ended July 2025, the AUM of PE-owned RIAs declined from $2.45 billion to $2.31 billion, signaling a shift towards middle-market momentum in sub-$1 billion RIA platforms. The number of PE-backed RIAs managing less than $1 billion also rose to 81 this year, up from 62.
The Appeal of Middle-Market RIAs to Private Equity
RIAs in the $500 million to $5 billion AUM range present an attractive opportunity for private equity investors. These firms often possess strong growth fundamentals, including loyal client bases, entrepreneurial leadership, and scalable platforms that can benefit from strategic capital and operational efficiencies.
Unlike larger firms with higher entry costs, middle-market RIAs offer a balance of strong earnings potential at a more accessible investment level. This makes them appealing targets for private equity firms seeking growth opportunities.
The Impact on M&A Activity
The growing involvement of private equity in midsize RIAs could lead to accelerated deal activity in the RIA M&A market. With record-breaking annual M&A activity in recent years, fueled by both PE and aggregator demand, the influx of PE funding into smaller firms is expected to continue driving deal volume.
Large consolidators, looking to build scale through acquisitions, face increased competition from PE firms. Differentiation becomes crucial as clients prioritize comprehensive planning capabilities, specialized service models, and personalized advice over sheer size.
The Future of Wealth Management M&A
As the wealth management industry evolves, PE’s interest in mid-market RIAs guarantees intensified competition, adjusted valuations, and a reshaped deal landscape. Mega-aggregators will need to adapt their acquisition strategies, considering alliances, minority stakes, and innovative integration models to stay competitive.
Standing still is not an option in today’s wealth management M&A environment. Private equity’s focus on midsize RIAs is reshaping the market, requiring both PE firms and aggregators to navigate this new terrain with discipline and ambition.
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