Corporate Valuation, Investment Management

October 5, 2015

Rough Quarter for the RIA Industry

AM Performance vs SP500 Q3 was an especially bad quarter for asset managers, with the group losing over $40 billion in market capitalization during a six week skid. Given the sector’s run since the last financial crisis, many suggest this was overdue and only pulls RIA valuation levels closer to their historic norms. The multiple contraction reflects lower AUM balances and the anticipation of reduced fees on a more modest asset base. Asset Manager Compensation study The most recent sell-off brings the industry to the brink of a bear market despite the S&P being down only 10% or so over the last few months. Such underperformance is not surprising for a business tethered to market conditions and investor sentiment. The market is acknowledging that revenue for equity managers is directly tied to index movements and earnings often vary more than management fees due to the presence of fixed costs (as demonstrated in the example below). Combining these dynamics with some multiple contraction reveals the market’s rationale for discounting these businesses in recent weeks. Example-AM The impact on sector M&A is more nuanced. On the one hand, the lower price tag might entice prospective buyers fearful of overpaying. Yet for others the market’s recent variability could spook potential investors, and sellers may be less inclined to part with their businesses at a lower valuation. Though the third quarter figures aren’t out yet, the recent slide could curtail the deal making momentum we’ve witnessed over the last year-and-a-half. asset manager ma 2002 The outlook also remains uncertain and will ultimately be determined by market movements and asset flows. We’re neither smart enough nor dumb enough to predict future market movements and will defer that to the experts. As for asset flows, fee-richer active funds are losing ground to indexes and alternative products despite typically outperforming more passive strategies during market downturns. Overall, asset flows to riskier products (active or passive) are unlikely to improve until the recent volatility declines to more normal levels. [caption id="attachment_9360" align="aligncenter" width="500"]US Equity Fund Flows Current Assets Source: Morningstar[/caption]

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Mercer Capital to Sponsor The Florida Bar’s 44th Annual Attorney/Trust Officer Liaison Conference
Mercer Capital to Sponsor The Florida Bar’s 44th Annual Attorney/Trust Officer Liaison Conference
Mercer Capital is pleased to sponsor The Florida Bar’s 44th Annual Attorney/Trust Officer Liaison Conference, taking place July 30 to August 1, 2026, at The Breakers in Palm Beach. Matthew R. Crow, CFA, ASA, and Thomas C. Insalaco, CFA, ASA, will represent the firm at the conference.Presented by The Real Property, Probate and Trust Law Section of The Florida Bar, the annual conference brings together attorneys, trust officers, and other professionals for focused education on current trust and estate issues. The 2026 program includes sessions on trustee discharge, fiduciary accounting, undue influence, legislative updates, technology and financial exploitation, and trust and estate case law.Matt Crow is the CEO of Mercer Capital and leads the firm’s Investment Management Industry team. He works with RIAs, independent trust companies, broker-dealers, and investment consulting firms on valuation matters related to corporate planning and reorganization, transactions, employee stock ownership plans, tax issues, and valuations of intangible assets, options, and assets subject to contractual restrictions. He is a regular contributor to Mercer Capital’s RIA Valuation Insights Blog.Tom Insalaco is a Senior Vice President and a member of Mercer Capital’s Gift, Estate, and Income Tax Planning and Compliance practice group. Since 2008, he has provided valuation services across a broad range of industries and matters, including gift and estate tax, business succession and exit planning, and buy-sell agreements.Mercer Capital works with owners, fiduciaries, and professional advisors on valuation and advisory matters involving trusts, estates, tax planning, and disputes. The firm is pleased to support programs that help professionals navigate the financial issues that arise in complex estate and trust matters.Mercer Capital looks forward to connecting with attendees in Palm Beach and participating in this year’s conference. Visit the conference’s website to learn more: https://member.floridabar.org/s/lt-event?id=a1RWQ00000RcEFJ2A3.
Organic Growth Is Becoming the RIA Valuation Differentiator
Organic Growth Is Becoming the RIA Valuation Differentiator
Organic growth is becoming a critical valuation differentiator for RIAs as buyers look beyond market-driven AUM gains to assess whether growth is repeatable, measurable, and transferable. Firms with diversified business development channels and documented processes may be better positioned to support credible forecasts and defend premium valuations.
Independent Trust Companies Benefit from Durable Industry Tailwinds
Independent Trust Companies Benefit from Durable Industry Tailwinds
Independent trust companies continue to benefit from expanding wealth, intergenerational transfers, recurring fiduciary revenue, and growing demand for sophisticated advisory services. Strategic investments and broad transaction interest further demonstrate the industry’s long-term growth potential.

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