RIA Valuation Insights

January 25, 2021 Industry Trends

RIA Industry Extends Its Bull Run Another Quarter

Continuation of Market Rebound Drives All Categories of Publicly Traded RIAs Higher in Q4 2020

Share prices for publicly traded investment managers have trended upward with the market since March’s collapse.  Aggregators fared particularly well over the last nine months on low borrowing costs and steady gains on their RIA acquisitions.  Traditional asset and wealth managers have also performed well over this time on rising AUM balances with favorable market conditions. Against this backdrop, we discuss recent market performance, implications for your RIA, and a potentially improving outlook.

January 22, 2021 Transactions

Playing the Match Game: Finding the Perfect Fit Between Buyers and Sellers

Guest Post by Louis Diamond of Diamond Consultants

For both buyers and sellers, knowing where your firm fits into the RIA M&A landscape is an important first step towards identifying compatible transaction partners.  The universe of RIA sellers can be categorized based on firm culture, the motive behind the transaction, management’s expectations for post-transaction roles, liquidity needs, the status of next-generation management, and the like.  As RIA transactions have proliferated in recent years, several different buyer profiles have emerged that address the concerns of these different seller types.  In this week’s guest post, Louis Diamond of Diamond Consultants identifies four common buyer profiles and the types of sellers that fit well with each.

January 18, 2021 Asset Management

Small/Mid-Sized Asset Managers Can Stay Relevant

Asset Management Industry Outlook

Over the last decade, investors have generally earned a higher net return by investing in passive vehicles rather than actively managed funds. Passive market share is now greater for U.S. equity investing than active. While large asset managers (i.e. BlackRock), are protected by sheer scale, how do small/mid-sized asset managers stay relevant in this environment?

January 15, 2021 Industry Trends

Silver Linings: Using Crisis to Improve Your RIA’s Health

Guest Post by Matt Sonnen of PFI Advisors

Early in the COVID pandemic, PFI Advisors published an article outlining how RIAs could perform an “Operational Diagnostic” to improve their profitability.  Matt Sonnen wrote, “For now, advisors are focusing on exactly what they should be doing – guiding their clients through this turmoil and keeping them calm and focused on their long-term financial goals.  When the time is right, however, I’ll forward this article to our clients so they can begin the work of focusing on the bottom line…”

Nine months later, most RIAs and their clients have recovered from the market volatility and ended up having a very good year, at least on paper.  Now’s the time for RIA principals to consider how they can advance their firms to be ready to meet the next challenge with greater ease.

We’re featuring Matt Sonnen’s wisdom on operational best practices and business strategy in our upcoming conference, RIA Practice Management Insights, on March 3 and 4. 

January 11, 2021 Current Events Transactions

Q4 2020 RIA Transaction Update

Deal Activity Rebounds After Brief Lull; Deal Terms and Multiples Remain Robust

After a brief lull during the second quarter of last year, RIA deal activity surged in the fourth quarter, rounding out a record year in terms of reported deal volume.  Concerns about the pandemic and market conditions were quickly shrugged off, as deal terms and the pace of deal activity returned to 2019 levels after the brief pause at the peak of the shutdown. 

January 7, 2021 Practice Management

Announcing the Inaugural RIA Practice Management Insights Conference

Professionalizing the Business of Investment Management

We are excited to announce that we are putting together a virtual conference for RIAs that is focused entirely on operational issues – from staffing to branding to technology to culture – issues that are as easy to ignore as they are vital to success. The RIA Practice Management Insights conference will be a two half-day, virtual conference held on March 3 and 4.

December 22, 2020 Industry Trends

‘Twas the Blog Before Christmas…

2020 Mercer Capital RIA Holiday Quiz

As year-end approaches, we hope to spread some cheer with our RIA holiday quiz. Merry Christmas!

December 14, 2020 Practice Management

New York at Risk of Losing RIA Hub Status

Goldman’s Recent Plans to Move Its Asset Management Division to South Florida, a Possible a Sign of More to Come for the Empire State

This week’s post analyzes recent RIA moves out of the Big Apple and what it could mean for your firm.

December 8, 2020 Current Events Transactions

Did Macquarie Pay 11x EBITDA for Waddell & Reed? Yes and No

Catching a Falling (Butter) Knife

Last week, Macquarie Group announced its acquisition of Waddell & Reed (WDR) for $1.7 billion. At first glance, the pricetag implies an EBITDA multiple of over 11x and some are asking why Macquarie’s new CEO paid such a premium for a business whose AUM has halved over the last six years. Unfortunately, it’s not that simple. In this post, we dig into the deal economics and explain why paying a premium does not necessarily mean Macquarie over paid.

December 1, 2020 Transactions

The Role of Earn-Outs in RIA Transactions (Part Three)

In last week’s blog post, we covered five considerations for designing earn-outs. While there is no one set of rules for structuring an earn-out, keeping those conceptual issues in mind can help anchor the negotiation.  This week, we look at an example RIA transaction to illustrate how the considerations come into play when buyers and sellers are working out deal pricing and structure.