Investment Management

July 24, 2020

WHITEPAPER | Valuation of Independent Trust Companies

In this whitepaper we review the history of trust companies and how consolidation in the banking industry, changing consumer preferences, and favorable trust law changes have led to the proliferation of independent trust companies. We analyze the average trust company’s income statement and industry-wide trends, such as trust companies’ relative immunity to fee pressure. We consider valuation “rules-of-thumb,” and why they often fail to address the issues specific to a given firm. Finally, we consider the various valuation methodologies, including the use of discounted cash flow models and guideline public company analysis, and how the use of multiple valuation approaches can serve to generate tests of reasonableness against which the different indications can be evaluated.

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Not All AUM Is Created Equal
Not All AUM Is Created Equal

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Investment manager valuation depends on more than headline AUM. Fee rates, revenue durability, product-level growth, margins, and operating leverage all influence the quality of an asset base and the cash flows it can generate.
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Changing Drivers
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Thoughts on Compensation, Ownership, and Internal Succession

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