Transaction Advisory, Investment Management

December 16, 2019

Succession Planning for Investment Management Firms

Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis. The demographics suggest that increased attention to succession planning is well warranted: a full 62% of RIAs are still led by their founders, and only about a quarter of them have non-founding shareholders. Yet when RIA principals were asked to rank their firm’s top priorities in 2019, developing a succession plan was ranked last. Fortunately, there are many viable options for RIA principals looking to exit the business.

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When a Succession Plan Meets Reality
When a Succession Plan Meets Reality
RIA succession planning requires more than documented intent, it must withstand real-world pressures like financing constraints, governance challenges, and emotional factors. Firms that rigorously test these elements early preserve more strategic flexibility over time.
When RIA Ownership Structures Outlive Their Usefulness
When RIA Ownership Structures Outlive Their Usefulness

Gradually, Then Suddenly

Ownership structures in RIAs often decline gradually before problems become visible, leading to sudden impacts on value. Proactive planning and evolution are essential to sustaining long-term growth, talent retention, and client confidence.
Earnouts Aren’t Going Away, But They Are Changing
Earnouts Aren’t Going Away, But They Are Changing
Earnouts remain a core component of RIA transactions, but evolving structures are shifting more risk onto sellers through longer timelines and stricter performance criteria. Understanding how these mechanisms impact real deal value is essential for evaluating transaction outcomes.

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