Ready to sell? The 7 key factors driving your firm’s value
By Louis Diamond
We are in the midst of a seller’s market, with announcements of mergers and acquisitions (M&A) continuing to dominate the headlines.
In the first half of 2019, Fidelity Clearing and Custody Solutions reported 73 M&A transactions. Of those, 67 were RIA deals worth a total of $69.5 billion in assets, and six were independent broker-dealer transactions weighing in at $391 billion. What’s more, movement out of the traditional brokerage world has continued to accelerate.
It’s a trend that most industry insiders agree shows no sign of weakening in the near term – and for good reason. For most, it’s a win-win scenario, where plenty of sellers and transitioning advisors are looking toward scale, succession and monetary goals. Private equity firms, banks, consolidators, regional RIAs and the like are poised to capitalize on potential opportunities.
These benefits and opportunities aside, many of these potential sellers often do not have a clear picture of how much their businesses are worth, let alone the upsides they may gain from M&A.
While M&A are typically associated with existing RIAs and independents, the fact of the matter is that any time an advisor is offered a recruitment package from a brokerage firm, that firm is in essence ‘buying’ a business and conducting its own due diligence process to assess value. Therefore, understanding that value is imperative.