RIA Valuation Insights

June 7, 2021 Practice Management Wealth Management

Succession Planning for Independent RIAs

The Best Time To Plan Is Now

Succession planning has been an area of increasing focus in the RIA industry, particularly given what many are calling a looming succession crisis. The demographics suggest that increased attention to succession planning is well warranted: over 60% of RIAs are still led by their founders, and only about a quarter of them have non-founding shareholders. Yet, when RIA principals are asked to rank their firm’s top priorities, developing a succession plan is often ranked last. However, if you’re a founding partner or selling principal, it’s never too soon to start thinking about succession planning. Proper succession planning needs to be tailored, and a variety of options should be considered.

June 1, 2021 Transactions Wealth Management

Purchase Price Allocations for Asset and Wealth Manager Transactions

There’s been a great deal of interest in RIA acquisitions in recent years from a diverse group of buyers ranging from consolidators, other RIAs, banks and diversified financial services companies, and private equity. These acquirors have been drawn to RIA acquisitions due to the high margins, recurring revenue, low capital needs, and sticky client bases that RIAs often offer. Following these transactions, acquirors are generally required under accounting standards to perform what is known as a purchase price allocation, or PPA. In this post, we describe what a purchase price allocation is and discuss the common intangible assets acquired in the purchase of private asset and wealth management firms – existing customer relationships, tradename, non-competition agreements with executives, and the assembled workforce.

May 25, 2021 Industry Trends Practice Management

Post-Pandemic Tax Planning for RIAs

Is It Time To Consider a Change in Your Corporate Structure, or Your Address?

Dynasty’s move from New York to Florida and UBS’s relocation to Tennessee got plenty of attention. Post-pandemic, we’re starting to hear of smaller RIAs contemplating similar moves. There’s plenty of opportunity, because most investment management firms still call high-cost, high-tax states home.

May 17, 2021 Transactions

FAIR … The F-word in RIA M&A: Part 2

What Is a Fairness Opinion?

Process and value are at the core of a Fairness Opinion. It is backed by a rigorous valuation analysis and review of the process that led to the transaction.  In this second of a two-part series, we discuss some of the issues that are considered in a Fairness Opinion.

May 10, 2021 Asset Management Transactions Wealth Management

FAIR … The F-word in RIA M&A: Part I

When Do You Need A Fairness Opinion?

Fair is often the first-four-letter word that most children learn, and it often leads to more arguments than other choice words. Although children eventually learn that life is not always fair, we spend a lot of time ensuring that major economic events are. Transactions are rarely straightforward, and as the pace of M&A activity in the investment management community continues to accelerate, more shareholders are scrutinizing both the pricing and terms of transactions. In this post (and in the next), we explain when you should consider getting a Fairness Opinion and what that involves.

May 4, 2021 Current Events Industry Trends

Multiple Expansion Drives 70%+ Returns for RIA Stocks Over Last Year

Over the last year, many publicly traded investment managers have seen their stock prices increase by 70% or more.  This increase is not surprising, given the broader market recovery and rising fee base of most firms.  With AUM for many firms at or near all time highs, trailing twelve month multiples have expanded significantly, reflecting the market’s expectation for higher profitability in the future.  For more insight into what’s driving the increase in stock prices, we’ve decomposed the increase to show the relative impact of the various factors driving returns between March 31, 2020 and March 31, 2021.

April 26, 2021 Industry Trends Practice Management

Bull Markets Breed Complacency for Investors AND RIA Management Teams

Know Why Your Firm is Growing

This week we discuss why RIA management teams need to look a step or two beneath the surface to understand why their firm is growing. 

April 20, 2021 Industry Trends Wealth Management

Strong Gains in the Wealth Management Industry Propel RIA Aggregators to New Highs

Oh What a Difference a Year Makes…

On balance, 2021 should prove to be another challenging but favorable year for wealth management firms that focus on their clients’ needs and take advantage of rising demand for financial planning services.  Industry headwinds remain, but we’re confident that the industry will prosper, diversify, and expand.

April 12, 2021 Current Events Transactions

Q1 2021 M&A Update

An RIA M&A Frenzy

Despite the hiatus in M&A beginning in March of last year with the onset of COVID-19, 2020 was a strong year for RIA mergers and acquisitions and 2021 is expected to be even stronger.

April 6, 2021 Asset Management

RIA Industry Extends Its Bull Run Another Quarter

Publicly Traded Asset/Wealth Managers See Continued Momentum Through First Quarter as Market Backdrop Improves

The outlook for RIAs depends on a number of factors.  Investor demand for a particular manager’s asset class, fee pressure, rising costs, and regulatory overhang can all impact RIA valuations to varying extents.  The one commonality, though, is that RIAs are all impacted by the market. The impact of market movements varies by sector, however. On balance, the outlook for RIAs has generally improved with market conditions over the last several months.  AUM has risen with the market over this time, and it’s likely that industry-wide revenue and earnings have as well. The first quarter was generally a good one for RIAs, but who knows where the rest of 2021 will take us.