RIA Valuation Insights

A weekly update on issues important to the Investment Management industry

Industry Trends

RIA Market Update: Q1 2025

RIAs underperformed the S&P in Q1 2025, with alternative asset managers declining almost 20% after a year of outperformance. Year-over-year, traditional investment managers saw the strongest AUM growth, while alternative managers proved better at converting this growth to revenue. We explore further in our Q1 2025 Market Update.

Valuation

Webinar Replay: Understanding RIA Valuations

A Guide for Today's Market

In our latest webinar, Brooks K. Hamner, CFA, ASA and Zachary C. Milam, CFA explore the critical elements shaping RIA valuations in today’s market. They discuss the key factors influencing RIA valuations, the latest industry trends, methodologies for valuing RIAs, and best practices to maximize firm value. We hope you find it informative and helpful.

Valuation

What Drives RIA Value – Growth or Margin?

More of Both Is Best, but the Tradeoff Is Measurable

In motor racing, winning requires building a car with the best combination of speed and handling. There’s a tradeoff between them, as speed requires bigger motors, more structure, and larger tires and brakes, all of which add weight. In the early days of racing, most sports cars focused on either straight-line speed (Ferrari, Corvette) or maneuverability (Porsche, Lotus). Times have changed. Today, winning takes both. And in the RIA space, strong growth and big margins are hallmarks of a winning business.

Transactions Valuation

5 Takeaways from Dimensional Fund Advisors’ Deals & Succession Conference

Last week, Mercer Capital’s investment management team attended Dimensional Fund Advisors’ Deals and Succession conference at Dimensional’s offices in Charlotte, North Carolina. The event focused on the current M&A environment and best practices for internal succession planning and ownership expansion. In this week’s post, we share our five key takeaways from the conference.

Practice Management

Succession Planning Options for RIAs

The RIA industry is facing a potential succession crisis, with many firms still helmed by their founders and lacking in non-founding shareholders. Although succession planning is vital for the long-term success of these firms, it is often sidelined in favor of immediate growth strategies. This article delves into various solutions for RIA principals, from internal transitions to external acquisitions, highlighting their benefits and potential drawbacks.

Current Events Industry Trends

Specter of Stagflation Threatens RIAs

Time to Stop and Consider a Trifecta of Possible Headwinds for Investment Managers

Higher interest rates over the past three years haven’t had much impact on RIA transaction multiples. As rates started to fall in 2024, we saw the possibility of further support for transaction activity throughout the investment management community. The political and economic environment of early 2025 seems to be pointing to a new risk not seen since the late 1970s, and it isn’t too early for leadership at investment management firms to consider (model) what might happen if we find ourselves revisiting some of the challenges of the Carter years: stagflation.

Valuation

RIA Valuations and How to Maximize Yours

A few weeks ago, we had the honor of participating in Alaris Acquisitions’ The Buyer’s Boardroom podcast episode on RIA valuations. In this week’s post, we feature the podcast episode, where Brooks Hamner discusses RIA valuation methods, misconceptions surrounding rule-of thumb measures, key value drivers, and the pros and cons associated with internal versus external sales of your RIA business.

Practice Management

Who Should Own Your RIA?

The Best Ownership Model Is One That Supports the Business Model

Aside from the initial startup years, when fledgling RIAs struggle to achieve profitability, the most difficult period that most firms endure is the transition from the founding generation of leadership to G2. For those that make the transition, getting from the second generation to the third, and so forth, is comparatively easy. Much of this difficulty relates to a contemporaneous transition of ownership — not just the identities of the owners but also the structure of the ownership. In this week’s post we look at the four primary RIA ownership models and discuss how to find the best one for your RIA.

Valuation

What Does the RIA Valuation Process Entail?

As you can imagine, a lot of prospective clients want to know what the RIA valuation process entails. They’re often taken aback when we tell them it typically takes six to eight weeks from start to finish, but that’s probably because they don’t realize what it all entails if they’ve never had one done. For this week’s post, we’ll channel our inner Nick Saban and focus on the typical valuation process for RIAs.

Investment Management

Mercer Capital provides RIAs, trust companies, and investment consultants with corporate valuation, litigation support, transaction advisory, and related services