6 Realities for RIA Buyers and Sellers in Today's Market
M&A is all the rage these days — several specialists pointing out this year has had more than 100 deals in the financial advisory field to date. But what are some of the trends inside this development? A new study by Advisor Growth Strategies and sponsored by BlackRock found some interesting new demands on buyers and new realities for sellers.
IMPACT Day 2: Next Gen Compensation And Equity
Succession planning is a major concern for aging advisors.
The Financial Services industry is old, with the average age of a financial advisor hovering above 50 (there are twice as many CERTIFIED FINANCIAL PLANNERS™ (CFP®) over 70 than under 30). Moreso, books of business of primarily older clients don't fetch as much in the market (due to the younger generation's desire to become independent from their parents' advisors). Exiting via selling your business to a larger firm is no longer a viable strategy.
Why bigger RIAs demand more equity when selling their practice
Not all advisor dealmaking is created equal.
According to a new report from RIA consultancy Advisor Growth Strategies, bigger RIAs are more likely to use equity when merging than their smaller counterparts.
Advisor Growth Strategies found that from 2015-2018, the total consideration in the average $1 billion AUM-plus RIA deal consisted of around 47% equity. In contrast, the average sub-$200 million AUM deal consisted of just 38% equity.
Every RIA Is a Schrödinger Cat. Is Yours Alive or Dead?
Regardless of size or intention, every RIA is merely a Schrödinger cat.
Somewhere ahead of them is a fork in the road and, based on the circumstances at that moment in time, it could become a buyer or a seller. It will either live or die.
Erwin Schrödinger, the Austrian physicist who won the Nobel Prize in Physics in 1933, created the paradox that has been repeatedly referenced in pop culture. Schrödinger’s thought experiment centered on a hypothetical cat in a box that is simultaneously alive and dead, indefinitely. But if someone opens the box, they would either find a dead cat or a live one.
What it Takes to Win in the RIA Acquisition Game
Want to beat out competitors to buy RIA firms? You still need plenty of cash – but increasingly, you need a long-term success narrative and a well-oiled integration machine as well.
That’s one of the takeaways from the initial “RIA Deal Room” research report, compiled by wealth management consultancy Advisor Growth Strategies and sponsored by BlackRock. The report goes beyond basics like number, size and price of acquisitions to examine the terms of recent deals.
Inside the RIA Deal Room: Advisor Growth Strategies, With Support From BlackRock, Unveils New M&A Study
Advisor Growth Strategies, a management consulting and transaction advisory firm serving financial advisory firms and institutions, today announced the release of a special research report called "The RIA Deal Room." Sponsored by BlackRock, the study provides unbiased, data-driven insights into the changing M&A landscape, including how acquirers and sellers are getting deals done.
The concept behind the study is to provide a more novel, in-depth look at the mechanics underlying RIA M&A transactions and provide information that is not otherwise readily available to market participants. This study is a result of a detailed analysis of recent M&A transactions.