The Wire

February 24, 2013

What is Your Advisory Practice Really Worth?

Recently an advisor was interested in selling his practice that he had built over the past several years. He was 69 years of age and wanted to be completely done working in the business within a year of closing the deal with his “ideal” buyer. The practice was a 100 percent fee-only business on about $125 million in assets, an attractive attribute.

The practice was generating approximately $1 million in gross revenues and the advisor/owner was taking home about $550,000 each year in income. This certainly seems like a well-run business and a desirable acquisition candidate on the surface. When asked what he thought the practice was worth, the advisor responded, “about $2.2 million.”

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January 29, 2013

What is Your Firm Really Worth?

Advisors who want to optimize the value of their firm may be in luck.

In the third of a four-part whitepaper series on advisor firm valuation, the Alliance for RIAs (aRIA) outlines how advisors can create a path to grow the value of their business, dependent on liquidity of cash flow and risks within a firm’s business and revenue model. 

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January 28, 2013

Third aRIA Whitepaper Delivers Independent Financial Advisor Valuation Manual

The Alliance for RIAs (aRIA) today released the third of a four-part whitepaper series for advisors called Creating Value and Certainty Within Your Independent Advisory Firm.

The series of papers is based on the combined experience and observations of the six aRIA members, all RIAs who collectively manage over $20 billion of client assets.

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January 28, 2013

How Much is that Advisory Firm in the Window?

Advisory firm owners have unrealistic expectations about what their firms are worth.

Sales of RIA firms usually are done based on a multiple of cash flow, but owners and founders often overestimate their free cash by forgetting to factor in the cost of their replacement, according to a white paper released today by the Alliance for RIAs.

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December 17, 2012

HighTower Passes up $40 million Capital Raise

After taking a pass on a big new round of financing following one of the biggest deal-making tears in RIA history, HighTower Advisors LLC declared a mini-moratorium on purchases for the latter months of the year — and carried it out.

It’s a relatively radical action taken by a company accustomed to announcing big deals every few weeks.

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December 9, 2012

How RIAs are Becoming as Complacent as Wirehouses

Independent advisors have experienced a great run but they may be running out of time to make the changes needed to be part of tomorrow’s success story.

Since Cerulli Associates started publishing the growth metrics for the space in 2004, RIAs and IBDs have grown at a significantly faster pace relative to the rest of the industry. Perhaps this explains why many independent advisors now act like their wirehouse counterparts — complacent, entitled, and satisfied with their position in the financial advisory world.

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