Knowledge and Insight
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Beating Post-Merger Blues: What Marriage Can Teach Advisors
Added on April 2014 in M&A Issues
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Summary: What is the secret to success for advisory firms that decide to take the plunge? After all, a merger resembles a marriage of sorts, with many of the same challenges and few of the same benefits. Similar to partners in an ill-conceived marriage, many advisors expend more energy on the wedding than on the long-term relationship.
5 Issues Advisors Must Consider When Selling Their Practices
Added on April 2014 in M&A Issues
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Summary: Not too long ago, a financial advisor called me to say he heard that a colleague had just sold his independent practice for a pretty penny: three times revenue. Could I get him the same deal? Matt Brinker, senior VP of United Capital, practically rolls his eyes when he hears a story like this: “Every time I am on a panel discussing M&A in wealth management, the first question from the audience is, ‘What are the current multiples?’" Multiples are nice, but they aren’t everything. And they may, in fact, be deceptive. “Price matters, but terms trump price,” says Brinker.
RIAs Lead The Way In Advisor M&A Activity
Added on April 2014 in M&A Issues
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Summary: The number of merger and acquisition deals among registered investment advisors jumped 20% in 2013 versus the prior year, according to figures from Schwab Advisory Services. At the same time, the total assets purchased in those deals dropped by 26% and the average deal size sank by 38%.That’s because the largest share of the 54 transactions done last year were RIAs buying other RIAs (44%), as opposed to 2012 when so-called strategic acquiring firms were the leading buyers and accounted for 53% of the 45 deals.
8 Keys to Inorganic Growth for Advisory Firms
Added on March 2014 in M&A Issues
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Summary: When advisors think about growing their business and building scale, an inevitable underpinning of the strategy is either deploying a recruiting campaign to attract advisors with a book of business, or trying to develop a functional M&A plan to merge with or buy another independent advisor. There is something intriguing about this phenomenon: most independent advisors fail to realize that many of their peers want to do the exact same thing!
Advisor M&A and Succession Planning: Measuring Valuation
Added on March 2014 in M&A Issues
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Summary: As more and more Baby-Boom-vintage advisory firms come up for sale or succession these days, the question of valuation is a recurrent theme. There are many methods to value a “small business” such as independent advisory firms—discounted cashflow, a multiple of earnings, a percentage of client AUM, etc.—but revenue multiples get little respect these days.
