Key Takeaways
Public markets reward durability, scalability, and predictability—attributes that don’t always define “great” private businesses
Founder-driven or bespoke models can lose some of their edge when subjected to public market scrutiny
RIAs considering selling to consolidators should consider whether their firms are built to be exceptional businesses or durable public companies
Driver’s Seat
If you’re not familiar with Koenigsegg, that’s kind of the point.
The Swedish automaker produces some of the most advanced hypercars in the world - machines like the Jesko and Gemera that are less like transportation and more like engineering experiments conducted at 250 miles per hour. Production volumes are measured in dozens, not thousands. Each car is a showcase of what’s possible when cost, convention, and sometimes common sense are treated as optional constraints.
Christian von Koenigsegg founded the company in 1994 and has been at the center of its innovation ever since. The brand’s appeal is rooted in rarity, technical brilliance, and a certain mystique that comes from doing things no one else can (or will) do.
You might not expect a company like Koenigsegg to go public, but you would be wrong.
From Ängelholm to Wall Street
Bracket my discussion of Koenigsegg and let’s talk about another founder who wants to take his business public: Bill Ackman.
Ackman’s Pershing Square is already partially public through Pershing Square Holdings, but (for several years) there has been ongoing discussion about expanding or evolving that structure. Unlike Koenigsegg, Pershing Square operates in a business (asset management) that is inherently scalable. Add assets, maintain discipline, and operating leverage does the rest.
But the parallels are more interesting than the differences. Both Koenigsegg and Pershing Square are founder-driven enterprises built on distinct approaches. One expresses that through engineering, the other through concentrated investing. Both rely, to some extent, on judgment, vision, and a willingness to deviate from the norm.
And both businesses profit from products which are inherently unnecessary. Why pay for a concentrated closed-end portfolio when it’s easy to DIY the same? Why spend millions on a Koenigsegg when there are thousands of much more practical alternatives (Lamborghini)?
Jim Collins famously wrote about companies going from good to great. It’s worth asking whether, in some cases, the path to public markets runs in the opposite direction. The question is not whether either is a “good” business. It’s whether that distinctiveness translates into a public market structure.
What Public Markets Value
Public markets are not in the business of rewarding uniqueness for its own sake. They tend to favor attributes that can be observed, measured, and repeated.
In our experience, those attributes are fairly consistent:
Predictable revenue
Scalable growth
Diversified sources of income
Limited dependence on any one person
They tend to discount the opposite:
Lumpy or episodic performance
Business models that are difficult to replicate at scale
Concentration, whether in clients or investments
Key-man dependence
This is not a philosophical stance; it’s a valuation framework. Value in investment management is a function of growth, margin, and durability. Public markets tend to place a premium on the last of those.
Hypercars and Hedge Funds
Koenigsegg’s strengths are obvious. Scarcity creates pricing power. Engineering leadership creates brand equity. The result is a business that, while small, occupies a unique and defensible position.
But those same attributes present challenges in a public format. Production is inherently limited. Revenue is irregular. Innovation is closely tied to a founder. These are features, not bugs, until the market asks for quarterly consistency.
Pershing Square presents a different version of the same translation problem. Asset management offers scalability that Koenigsegg does not. But concentrated portfolios, episodic performance, and a strong association with a single investor introduce their own variability.
To be clear, none of this is a critique. Pershing Square has already demonstrated an ability to operate in public markets. But scaling that model within a broader public framework may invite a different set of expectations that emphasize consistency as much as conviction.
Great to Good
It may seem odd to compare hypercar manufacturers with money managers, but the public market outcomes in both industries suggest some common patterns.
In investment management, several public RIA platforms have struggled to meet expectations. Focus Financial, AlTi, and Wealthfront each illustrate, in different ways, the challenges of translating private business success into public company performance.
Automakers tell a similar story. Lotus and Aston Martin have both faced well-documented difficulties as public entities. Even Porsche’s recent listing has raised questions about long-term positioning and control.
There are, of course, exceptions. Ferrari stands out as a company that has successfully translated exclusivity into a public market premium. In the RIA space, Victory Capital offers an example of a model that aligns well with public market preferences (scalable, diversified, repeatable).
And then there are the stalwarts. Franklin Resources in asset management. Ford in automobiles. Durable businesses, to be sure, but not necessarily ones that have rewarded public shareholders with exceptional returns in recent years.
The common thread is straightforward: being a great business is not the same as being a great public company.
How About You?
For RIA owners, this raises a practical question: what kind of business are you building?
Many firms in our industry are high-touch, relationship-driven, and often heavily influenced by their founders. These are strengths. They drive client retention, support pricing, and create cultures that are difficult to replicate. But they may also resemble, structurally, something closer to Koenigsegg than Ferrari.
That doesn’t make them less valuable. It simply suggests that the path to realizing that value may not run through public markets. Internal succession, minority recapitalizations, and other private transactions may provide better alignment between the nature of the business and the expectations of its owners.
As we’ve noted before, durable organic growth tends to be a more reliable driver of long-term value than episodic gains. The same principle applies here: durability of the business model matters as much as its peak performance.
Whither Liquidity
As we’ve written many times in this blog, there is a puzzling disparity between the pricing of publicly traded investment management businesses and the valuations of RIA consolidators. This disparity raises many questions worth pondering, one of which is whether (or not) sponsor-backed consolidation models will ultimately be able to achieve liquidity via an IPO.
Going public is not an upgrade. It’s a transformation. Some businesses are designed for that transformation. They benefit from scale, thrive under scrutiny, and deliver the kind of consistency that public investors reward. Others derive their value from attributes that are harder to standardize, judgment, scarcity, or a willingness to operate outside the norm.
Koenigsegg may be more valuable because it is rare. Pershing Square may continue to prove that distinctiveness can coexist with public ownership. Both are worth watching. For most RIAs, the more relevant question is simpler: are you building something exceptional, or something repeatable?
Public markets tend to prefer the latter.
About Mercer Capital
Mercer Capital’s Investment Management Team provides valuation, transaction, consulting, and litigation support services to asset managers, wealth managers, independent trust companies, broker-dealers, and alternative asset managers.