Key Takeaways
Wealth Management Trades Like Levered Beta: When revenue moves with markets, costs are sticky, and leverage amplifies volatility, public investors see cyclical earnings, not structural advantage.
Scale Isn’t the Story, Structure Is: Victory Capital’s success, in contrast to other recent RIA IPOs, suggests public markets reward integrated platforms with operating leverage and capital discipline, not AUM roll-ups built on financial engineering.
If IPOs Don’t Work, Today’s Entry Multiples May Not Either: With exits down and fundraising pressure rising, PE-backed consolidators may need public markets, but recent history suggests public investors are not eager buyers.
There is a quiet irony developing in wealth management.
Private equity firms continue to pay premium, sometimes nosebleed, prices for large RIA platforms. Acquisition funding continues to be available and consolidators keep consolidating. Even as private market exits have slowed and fundraising has become more difficult, sponsors remain willing to commit fresh capital to the sector.
At the same time, public markets have shown only modest enthusiasm for investment management businesses.
Focus Financial went public in 2018 and ultimately went private five years later after generating less than a 10% total return for shareholders (IPO priced at $33, went private at $53, no distributions). AlTi Global, formed through a SPAC combination to create a global alternatives and wealth platform, struggles to gain durable traction with public investors (trading for less than half its IPO price nearly five years later). Wealthfront debuted in late 2025 with strong brand recognition and technology credentials, yet its stock performance has been dismal (down nearly 40%).
Against that backdrop, one relative bright spot stands out: Victory Capital. Victory has performed well as a public company (IPO eight years ago at $13, currently priced at more than $70 with $1.96 annual dividend) and now finds itself in a bidding contest for Janus Henderson, not as a target, but as an acquirer.
Three wealth-oriented platforms underwhelmed. One asset manager has thrived. That contrast is not accidental.
Meanwhile, I hear rumblings in the private equity community suggesting a growing recognition that IPOs may once again become necessary. With realizations down and distributions to limited partners under pressure, sponsors need multiple exit pathways to recycle capital and support new fundraising. Continuation vehicles and secondary sales can only do so much. At some point, so the logic goes, public markets must re-enter the equation.
This leads me to wonder whether IPOs are in the future for wealth management.
Private Market Investment Thesis
Wealth management is, in many respects, an excellent private business. Revenue is recurring. Client relationships are sticky. The model is not capital-intensive. Margins, under normal conditions, are attractive. Demographic trends are supportive. It is not difficult to see why private capital finds the space appealing, particularly when acquisition-driven growth can accelerate scale.
Private equity sponsors underwrite to a defined horizon, typically five to seven years. They assume markets will normalize. They model through volatility rather than pricing it quarterly. Leverage can enhance returns if the exit math works. The emphasis is on internal rate of return over a finite period, not perpetual valuation multiples.
Under that framework, wealth management consolidation can make sense, even at multiples that would have made analysts wired for intrinsic value blanche just a few years ago.
Public Market Investment Skepticism
I used to think the problem with publicly traded wealth managers was that they got painted with the same brush as asset management, stuck in a race to the bottom on fees and constantly leaking AUM. Now I see it a little differently.
In public market shorthand, investment management is often dismissed as plays on “levered beta.” The critique is straightforward. Revenue is largely a function of assets under management. AUM rises and falls with equity and credit markets. Markets themselves are leveraged expressions of the broader economy. Most RIA costs, especially compensation, technology, and infrastructure, do not adjust immediately when revenue declines. Add acquisition-related debt, and earnings volatility compounds. Markets are leveraged to the economy. Revenue is leveraged to markets. Profits are leveraged to revenue. And distributions are leveraged to debt-burdened cash flow.
When markets fall 20%, revenue may fall proportionally. Because expenses are relatively fixed in the short run, EBITDA can fall by more than 20%. If leverage is present, the impact on equity value is magnified further.
From the perspective of a public investor marking positions daily, that layered exposure can look less like a defensive compounding story and more like a cyclical company with financial leverage layered on top.
Private investors can afford to look through cycles, whereas public markets price them continuously.
Labor Economics
There is also a structural reality that complicates the public equity story. Wealth management is fundamentally a professional services business. Revenue depends on relationships. Relationships depend on people. Compensation is the largest expense category. Growth often requires reinvestment in advisors, marketing, and infrastructure.
Margins in wealth management are healthy, often in the 20% to 30% range under normalized conditions, but they are not software-like. Operating leverage exists to a point, but it is not automatic. As firms grow, compensation expectations grow with them. Scale does not always translate into widening margins, at least not beyond a certain point.
Public markets tend to reward businesses where scale naturally expands profitability. In wealth management, integration and discipline determine whether that happens. In the current margin regime, one would think that the labor intensive nature of wealth management would shield it from AI risk, but that thesis is yet to gain traction.
Victory May Offer a Clue
Victory Capital provides a useful contrast. Victory operates as a multi-boutique asset management platform with centralized distribution and infrastructure. Acquisitions are integrated into a system designed to improve margins and free cash flow. The story is less about aggregating assets and more about enhancing economics.
Public investors understand platforms. They reward visible operating discipline, coherent capital allocation, and per-share earnings growth. Victory behaves like an operating company.
Many wealth management consolidators, by contrast, resemble federations of semi-autonomous firms. Scale is achieved, but integration is partial. Economics are accumulated more than transformed.
That distinction may determine whether IPOs succeed.
The Exit Conundrum
Private equity continues to pay strong multiples for wealth management platforms at a time when public markets have not consistently demonstrated enthusiasm for the sector. If IPOs are to serve as meaningful exit vehicles, particularly in an environment where realizations are down and fundraising pressure is rising, then public investors must ultimately embrace the model more fully than they have in recent years.
If they do not, entry multiples and exit multiples may diverge in unfortunate ways.
Sponsors clearly believe that either public market sentiment will improve or consolidation models will evolve enough to warrant stronger valuations. Perhaps both will happen. Capital cycles tend to correct imbalances over time.
So, Are IPOs in the Future?
The answer is likely yes. The private capital invested in large wealth management platforms will eventually seek liquidity. The IPO window will reopen, as it always does. But the next generation of offerings may need to look different from the last.
Public markets are unlikely to reward leverage layered on market beta. They may, however, reward platforms that demonstrate durable organic growth, moderate balance sheets, and clear evidence that scale improves economics rather than merely enlarging them.
The firms that bridge that gap, perhaps by studying what has worked at Victory and adapting those lessons to wealth management, will be the ones that succeed.
The rest may discover that wealth management is a wonderful private business that resists becoming a public stock.
About Mercer Capital
We are a valuation and advisory firm organized according to industry specialization. Our Investment Management Team provides valuation, transaction, litigation, and consulting services to asset managers, wealth managers, independent trust companies, broker-dealers, PE firms, and alternative managers.