Schwab Advisor Services Releases Industry-Wide RIA Merger and Acquisition Activity for First Half of 2013

According to industry-wide registered investment advisor (RIA) merger and acquisition (M&A) data compiled by Schwab Advisor Services, the first half of 2013 closed with 18 completed transactions, totaling $15.4 billion in assets under management (AUM), which is the lowest on record since the first half of 2008. In comparison, the first half of 2011 ended with 27 deals totaling $20 billion in AUM, while 25 deals totaling $36 billion in AUM were completed during the same time period in 2012. Deal flow in Q2 2013 slowed with only five completed deals, but there was an increase in the average deal size from $447 million in Q1 to $1.9 billion in Q2, 2013.

"Fewer mergers and acquisitions are a likely outcome of the rapid rate of organic growth that advisors are currently experiencing," said Jonathan Beatty, senior vice president, sales and relationship management, Schwab Advisor Services. “Advisors considering ownership transition may be focusing on creating more value in their firm leading them to delay a deal for a few years. However, M&A continues to be an important option for those looking to quickly gain scale, access new markets, or enhance their capabilities.”

A Possible Strategic Growth Strategy for Advisors

According to the 2013 RIA Benchmarking Study¹ from Charles Schwab, among firms managing $100 million to $1 billion in AUM approximately twenty-five percent (25%) are actively looking to acquire another firm.

“The good news is that advisors have more access to capital, which has enhanced their ability to invest in new capabilities and hire top talent,” added Beatty. “For some advisors, M&A is a good alternative to building out their offer in-house and can help the firm get to a solution faster.”

Schwab Advisor Services’ RIA M&A industry data is provided as part of the firm’s continued commitment to advancing the interests of RIAs. This includes supporting advisors through each phase of the process of starting, running, growing, and exiting a business.

About Schwab Advisor Transition Services™

Schwab Advisor Transition Services helps advisors think through growing and exiting a business at the right time, with the right people and at the right value. This includes goal setting, evaluating options (internal succession, external sale, and merger or acquisition) and executing a transition plan.

Schwab’s Transition Services includes Schwab’s M&A Listing Service, an online database offered to independent registered investment advisors that custody with Schwab Advisor Services. 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.

Additional information and new transitions content are available at www.SchwabTransition.com.

About Charles Schwab

At Charles Schwab we believe in the power of investing to help individuals create a better tomorrow. We have a history of challenging the status quo in our industry, innovating in ways that benefit investors and the advisors and employers who serve them, and championing our clients’ goals with passion and integrity.

More information is available at www.aboutschwab.com. Follow us on Twitter, Facebook, YouTube, LinkedIn and our Schwab Talk blog.

Disclosures

Through its operating subsidiaries, The Charles Schwab Corporation (NYSE: SCHW) 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; compliance and trade monitoring solutions; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through Schwab Advisor Services. Its banking subsidiary, Charles Schwab Bank (member FDIC and an Equal Housing Lender), provides banking and lending services and products. More information is available at www.schwab.com and www.aboutschwab.com.

Brokerage Products: Not FDIC Insured • No Bank Guarantee • May Lose Value

Investing involves risk, including possible loss of principal.

All data compiled and analyzed by Schwab Advisor Services. Data reflects firms being sold with assets under management exceeding $50 million as of June 30, 2013.

¹About the RIA Benchmarking Study

Schwab designed this study to capture insights in the RIA industry, based on survey responses from individual firms. The 2013 study provides information on topics such as asset and revenue growth, sources of new clients, products and pricing, staffing, marketing, technology, and financial performance.

Since the inception of the study in 2006, more than 2,500 firms have participated, with many repeat participants. A total of 1,025 advisory firms representing nearly half a trillion dollars in AUM that custody their assets with Schwab participated this year, making this the leading study in the RIA industry.

The RIA Benchmarking Study comprises self-reported data from advisory firms that custody their assets with Schwab. Participant firms represent various sizes and business models. They are categorized into 12 peer groups—6 wealth manager groups and 6 money manager groups, by AUM size.

The study is part of Schwab's Business Consulting Services, a practice management offering for RIAs. Grounded in the best practices of leading independent advisory firms, Business Consulting Services provides insight, guidance, tools, and resources to help you strategically manage and grow your firm.

Schwab may limit what can be listed on the M&A Listing Service. Buyer listings and Career Opportunity listings are generally, but not always, limited to independent investment advisors that custody their clients' assets with Schwab Advisor Services. Schwab Advisor Services may further limit Buyer listings and Career Opportunity listings to those of its clients with whom it has favorable business prospects. Schwab Advisor Services has a financial interest in, and compensation received by Schwab Advisor Services personnel is affected by, the retention and growth of assets custodied at Schwab Advisor Services. This may incent Schwab Advisor Services to decline some proposed Buyer and Career Opportunity listings.

Independent investment advisors are not owned by, affiliated with or supervised by Schwab.

© 2013 Charles Schwab & Co., Inc. (Member SIPC) All rights reserved.

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