Transaction Advisory, Investment Management

May 20, 2019

What We’re Reading on the RIA Industry

M&A and Practice Management

Much of the sector’s recent press has focused on the current M&A environment as well as practice management issues for RIA firms, so we’ve highlighted some of the more salient pieces on these topics and a few others that are making news in the investment management industry.

Goldman Sachs Readies Splashy RIA Retail Debut as it (Likely) Adds $24-Billion United Capital to $35-Billion AUM Ayco for $59-Billion 82 Office Behemoth; Months After Buying RIA Lure From S&P

By Oisin Breen, RIABiz Goldman Sachs recently completed its acquisition of United Capital for $750 million, marking a major expansion into the RIA space for Goldman and a significant endorsement of the RIA aggregator model.  The deal value represents approximately 3% of United Capital’s $24 billion AUM and a little over 3x revenue of $230 million.

M&A Gains Drive Focus’ 33% Revenue Growth

By Jessica Mathews, FinancialPlanning RIA aggregator Focus Financial reported 33% year-over-year revenue growth in the first quarter.  The growth comes primarily from new partner firms acquired over the last year.  In its IPO filings last year, Focus management outlined a growth strategy based on continued M&A and organic growth at Focus’s partner firms.  While organic growth has faltered somewhat (partly due to market conditions), Focus has clearly executed on the M&A component of its growth strategy.  So far this year, Focus has acquired 21 firms, with 12 of those acquisitions taking place in the first quarter.

Bye-bye Broker Protocol: HighTower Exits in Identity Makeover

By Charles Paikert, FinancialPlanning HighTower Advisors has exited the broker protocol, the industry agreement which allows advisors switching employers to take basic client contact information with them.  Exiting the protocol reflects the evolution of HighTower’s business model from recruiting wirehouse teams to focusing on RIA acquisition activity.  For some, the decision to exit the protocol is seen as a way to increase retention — perhaps in preparation for a future liquidity event.  With recent liquidity events from the other two major roll-up firms, Focus Financial and United Capital, now may be a good time to exit for PE-backed HighTower.

U.S. Wealth Management Becomes Hotbed of M&A 

By Chris Flood, Financial Times Private equity interest in wealth management has continued to increase, given the industry’s growth opportunities and stable cash flows.  The wealth management industry remains highly fragmented but is poised to consolidate.

Merger Mania: Why Consolidation in the RIA Space is About to Explode

By Jeff Benjamin, InvestmentNews Some industry players see the pace of consolidation picking up.  Ron Carson, CEO of Carson Group, predicts that in seven years there will be a third less firms than there are today.  Historically, there has been less consolidation than we would expect given the size and fragmentation of the industry.  However, given the current dynamics of aging ownership, PE interest in the space, and consolidators offering scale and back office efficiencies, the pace of M&A may accelerate significantly.

Kitces: The Ratios That Determine Advisory Firm Success

By Michael Kitces, FinancialPlanning Tracking productivity, identifying its drivers, and understanding how to improve are important aspects of managing a successful advisory firm.  Michael Kitces offers his take on some of the key performance metrics for advisory firms.
In summary, consolidation and M&A continue to be major trends in the investment management industry.  RIAs continue to receive interest from PE investors due to the recurring revenue and growth potential that wealth management firms offer.  Aging ownership bases have also contributed to the consolidation tailwind.  The RIA aggregator model has now been endorsed by Goldman Sachs with its acquisition of United Capital, as well as the public markets with Focus Financial’s IPO last year.  Whether HighTower’s PE backers will seek an exit in the near term remains to be seen, but given the interest in the Focus IPO and the attractive multiple offered by Goldman for United Capital, it is clear that market interest in the aggregator model is strong.

Continue Reading

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.

Cart

Your cart is empty