As referenced in our prior post on sector dealmaking RIA M&A Update: Q2 2025, private equity firms are driving unprecedented consolidation in the RIA industry. The first half of 2025 recorded 132 transactions involving $182.7 billion in AUM, marking a robust recovery from 2024. Private equity accounted for 53% of acquirers in Q2, up from 45% the prior year, reflecting a strategic shift in ownership dynamics.

This post examines the trends fueling PE’s dominance, the valuation multiples shaping transactions, and strategic considerations for RIA owners navigating this transformative landscape.

The Evolution of PE Ownership in RIAs

Private equity’s role in the RIA sector has evolved from opportunistic investments to a disciplined, scale-driven model. As of July 2025, 295 PE-backed RIAs operate in the U.S., a 16% increase year-over-year, managing AUM that often grows faster than independent firms due to strategic acquisitions and operational efficiencies.

This growth reflects a “buy-and-build” strategy, where PE firms acquire platform RIAs and integrate smaller add-ons to increase scale and create national brands. In Q1 2025, PE-backed consolidators accounted for 74% of total RIA deal volume with 86 transactions, underscoring their rising market share.

Firms like Focus Financial Partners and Carson Wealth exemplify this approach, leveraging PE capital to expand geographic footprints and service offerings. Unlike internal transitions, which often yield lower valuations due to financing constraints, PE-backed deals prioritize scalability, targeting firms with high-net-worth client bases and modernized operations. Deal activity, up nearly 20% year-to-date, highlights PE’s focus on growth-oriented assets.

Valuation Multiples: Stability with Strategic Premiums

Valuation multiples for RIAs have remained resilient in 2025, despite macroeconomic challenges and geopolitical uncertainty. Much of this resiliency is attributable to PE-backed transactions that are drawn to the sector’s recurring revenue and growth potential.

High-growth RIAs with organic AUM inflows of 5-10% annually and diversified revenue streams can fetch EBITDA multiples that are measurably higher than firms with asset outflows and customer concentrations.  According to PwC, total deal value in the first half of 2025 rose 15% year-over-year, despite a 9% dip in volume, signaling a focus on scale over quantity.

Bid variances remain a critical factor, with top offers sometimes exceeding the lowest by a substantial margin, and are contingent on a firm’s strategic alignment with PE priorities. Robust succession planning can enhance enterprise value by mitigating client retention risks. Current trends suggest an additional 46 direct PE investments by year-end, only slightly below 2024’s 51, with a focus on mid-market RIAs ($500M-$2B AUM) ideal for roll-ups.

The PE Playbook: A Blueprint for Scale

Private equity’s success in RIAs hinges on a structured approach:

1. Platform Development: PE targets anchor firms with strong leadership and scalable infrastructure, then pursues add-on acquisitions annually to achieve economies of scale.
2. Operational Enhancement: Post-acquisition, PE invests in technology (e.g., CRM systems) and talent development to address generational transitions. This strengthens AUM retention and supports premium valuations.
3. Exit Optimization: With holding periods of 5-10 years, PE aligns exits with market cycles, increasingly using continuation funds to extend ownership and enhance returns.

Strategic Guidance for RIA Owners

RIA owners considering PE partnerships should prioritize alignment with acquirer criteria: recurring revenue exceeding 80%, advisor productivity above $1M per head, and robust technology infrastructure. A comprehensive succession plan can significantly increase enterprise value by reducing operational risks. Engaging advisors experienced in quality-of-earnings diligence and auction processes is critical to narrowing bid gaps and maximizing value.

For firms prioritizing autonomy, internal succession remains viable, though often at lower multiples. The choice hinges on balancing cultural preservation with financial upside.

The RIA sector’s consolidation and multiple resiliencies continue to be propelled by private equity’s interest in the space. With deal activity at historic highs and multiples reflecting strategic premiums, owners who align with PE’s playbook can unlock significant value while ensuring long-term stability.

About Mercer Capital

We are a valuation firm that is organized according to industry specialization. Our Investment Management Team provides valuation, transaction, litigation, and consulting services to a client base consisting of asset managers, wealth managers, independent trust companies, broker-dealers, and alternative asset managers.