Corporate Valuation, Investment Management

September 17, 2015

Valuing RIAs

Understanding the value of an investment management business requires some appreciation for what is simple and what is complex.  On one level, a business with almost no balance sheet, a recurring revenue stream, and an expense base that mainly consists of personnel costs could not be more straightforward.  At the same time, investment management firms exist in a narrow space between client allocations and the capital markets, and depend on revenue streams that rarely carry contractual obligations and valuable staff members who often are not subject to employment agreements.  In essence, RIAs may be both highly profitable and prospectively ephemeral.  Balancing the particular risks and opportunities of a given investment management firm is fundamental to developing a valuation.

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From Great to Good? Koenigsegg, Ackman, and the Question of Going Public
From Great to Good? Koenigsegg, Ackman, and the Question of Going Public
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.
What Today’s RIA M&A Headlines Tell Us About Valuation and Succession
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RIA M&A headlines can create the impression that valuation is primarily about scale and headline multiples. In reality, today’s transaction environment reflects a more nuanced assessment of risk, growth, governance, and succession readiness.
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Our team attended Dimensional’s Deals and Succession Conference in Charlotte this week, where industry leaders gathered to discuss the evolving M&A and succession landscape. While activity remains strong, this year’s conversations centered more on growth quality, equity structure, leadership depth, and cultural alignment than on deal volume alone.

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