Advisory firms are pursuing mergers, acquisitions, and expansion into new markets to build scale, add capabilities, and serve clients more effectively. While this is nothing new, regulators are taking notice. On Friday, October 23, the SEC's Division of Examinations released its Fiscal Year 2027 examination priorities, which expressly identify advisers that have grown through M&A as an examination focus (FY 2027 Examination Priorities). For firms pursuing growth, the practical takeaway is to build compliance into the deal rather than treat it as a post-closing afterthought, which can be effectively implemented through a transition agreement or the like. Doing so doesn’t necessarily slow down the business deal, but holds the business accountable for integration efforts in a concerted and thoughtful way. This alert summarizes the new priorities and offers a practical playbook for expanding your business while avoiding regulatory missteps.
SEC Priorities for Aggregators
For growing firms, "[t]he Division will… prioritize advisers that have grown through mergers, acquisitions or other means, or are operating from multiple geographically dispersed branch offices. The Division will assess whether, as appropriate, the adviser has adapted its compliance program in response to these changes and whether it has identified and made any necessary changes to address new conflicts of interest.” The Division renews and expands last year's flag to advisers that have "merged or consolidated with, or been acquired by" other practices, which the SEC linked to "operational and/or compliance complexities or new conflicts of interest."
Notably, other FY 2027 priorities bear directly on transaction planning: economic conflicts of interest (fee rebates, fee and expense calculations, cash management, and quid pro quo arrangements); recommendations of complex, higher-risk, and illiquid products (including private fund loans, BDCs, special purpose vehicles, and option-based funds); private fund disclosure and fee accuracy; advisers that have changed their business models, client types, asset classes, or services; examinations of never-examined and recently registered advisers; and reliance on third-party service providers, alongside cybersecurity and operational resiliency. In alignment, the Division also published a new Exam Handbook on October 1, which firms preparing for an examination should review.
The Deal Environment
Consolidation remains the industry's defining trend. DeVoe & Company counted a record 322 announced RIA transactions in 2025 and projects 320 to 340 deals in 2026. Fidelity's midyear report found acquired RIA assets nearly doubled to $343 billion in the first half of 2026 , and FINTRX tracked $100.9 billion in acquired RIA assets in the third quarter alone. Cerulli estimates the acquisition opportunity at roughly $3 trillion of assets over the next five to ten years.
A Practical Growth Playbook
- Treat regulatory diligence as deal diligence. Before signing, examine the target's examination and deficiency history, Form ADV accuracy, fee and billing calculations, consistency between disclosures and actual practices, supervision structure, books and records, cybersecurity posture, and vendor reliance. For the acquirer, determine how the target’s business fits into the current business and strategize to make the necessary integration changes. Undisclosed compliance problems discovered in due diligence can delay or derail a transaction, so findings should inform pricing, representations and warranties, indemnities, and closing conditions.
- Address assignment and consent mechanics early. Determine whether your structure effects a change in actual control or management relevant to Rule 202(a)(1)-1 under the Investment Advisers Act of 1940 (the “Advisers Act”), which excludes transactions involving no such change from assignment treatment under Section 205(a)(2). Assess whether the transaction constitutes an assignment under Section 202(a)(1) of the Advisers Act, and review Section 205(a)(2) and the target’s advisory agreements to identify required client consents and how to obtain them. Address consent mechanics early to support closing certainty and client retention, alongside any applicable Form ADV amendments and deadlines, registration-continuity issues, state notice filings, and investment adviser representative registrations. Obtaining client consents can be a laborious process, so determining what consent is required and how that consent will be obtained can be paramount in ensuring a smooth transaction.
- Plan for new markets before you enter them. Expansion into new states or client channels is not automatically covered by existing registrations: analyze state and federal registration thresholds and notice-filing obligations (which turn on assets under management and client location); — supervision of geographically dispersed offices (an express FY 2027 exam focus); and any custody, marketing, and delivery obligations that change with the new footprint.
- Make post-closing integration a compliance project. The SEC's stated concern is whether the combined firm adapted its compliance program and addressed new conflicts. Assign ownership for consolidating policies and procedures, refreshing the conflicts inventory, re-validating fee and expense calculations, integrating the annual compliance review calendar, and harmonizing Regulation S-P incident-response and vendor-oversight programs. Firms that have changed business models, client types, or asset classes should expect examiners to test these adjustments.
- Prepare for the examination. Never-examined and recently registered advisers remain Division priorities. Use the SEC's new Exam Handbook as your roadmap and consider a pre- or post-closing mock examination focused on conflicts, billing, and disclosure — the areas the FY 2027 document emphasizes.
Conclusion
The FY 2027 priorities reinforce that compliance infrastructure must keep pace with growth: advisers that have grown through acquisition are now an identified, risk-based examination focus. Addressing consent mechanics, registration, conflicts, and integration early and as part of prudent transaction planning can reduce execution risk and help protect transaction value as you expand into new markets. We advise on transaction structuring, regulatory diligence, and examination readiness, and we would welcome the opportunity to support your growth plans.
This client alert is provided for general information purposes only and does not constitute legal advice.