Succession Planning for Investment Management Firms

In this article we discuss four of the most common “silent risks” embedded in otherwise well-intentioned succession plans.

Demographic shifts underlie the long-term market opportunity for medical device manufacturers. While efforts to control costs on the part of the government insurer in the U.S. (and elsewhere) may limit future pricing growth for incumbent products, a growing global market provides domestic device manufacturers with an opportunity to broaden and diversify their geographic revenue base. Developing new products and procedures is risky and usually more resource intensive compared to some other growth sectors of the economy. However, barriers to entry in the form of existing regulations provide a measure of relief from competition, especially for newly developed products.

Internal and external RIA transactions often reflect different economics beneath the headline multiples. While external buyers may justify higher prices through synergies and lower cost of capital, internal transitions can strengthen succession, reduce key person risk, and enhance long-term value.