Registered investment advisors (RIAs) work for decades to build and grow their businesses. For every firm owner, there comes a time to pass it along into other hands. For some, the best way to achieve their business and personal goals is an internal succession, while for others an external sale is the best fit. We discuss four considerations to keep in mind whether you plan to sell your firm internally or externally.

1. Consider Your Motives

Before you decide to sell your firm, create a list of your goals and objectives. Your reasons for selling your business will help determine how you approach the sale, the requirements on the part of the buyer and, ultimately, how you structure the deal. There are several questions to ask yourself that will help set the stage for a successful sale.

  • Why are you selling your financial advisory business?
  • What would you like to get out of the sale?
  • When do you want to retire?
  • How much control do you want to keep?
  • What do you want your role to be after the acquisition?
  • How will a sale affect your employees and clients?
Start Succession Planning

Thoughts of retirement, reclaiming time in your life to do other things, and/or succession planning are often at the core of an advisor’s motivation. Every advisor wants to ensure their clients are taken care of, while monetizing the value of the business. Finding the right combination of those two things can be daunting, and as a result many put it off too long.

Our greatest piece of advice is simply to start, and to help with that, we encourage advisors to think of it as a natural continuation of what you have already been doing. Each choice you have made that gives someone else a bit of control of a part of the client experience has been a step in your succession process. It often begins with hiring a client service associate to help with client onboardings, or outsourcing trading and operations to a TAMP firm. Simply put, you have made these decisions before. Looking at succession as the next logical step in this process may help you get started, as it truly is the most important thing you can do to ensure your clients are well-served beyond you.

Scaling For Growth

Another common motivator for RIAs considering a sale is an interest in scaling effectively. Many RIAs feel pressure to invest in people and technology to keep up with their competitors and meet the needs of their clients. For firms that lack the infrastructure or financial resources to expand, an option is to sell all or part of your firm to a larger RIA or benefit from joining a larger platform. A larger organization can often provide tools and resources you may not be able to afford for your firm, but that can help you and your employees better serve your clients. Aligning with a larger organization whose brand is more well-known can also help you attract more quality talent and provide more advancement opportunities for your current employees. It can also help you liquidate some of your equity while giving your clients a sense of continuity.

2. Value of Your Business

If you are planning to sell your firm, you need to know what the value of your firm is to ensure the sale proceeds are sufficient to meet your needs and expectations. Generally, in the financial advisory industry, firms are valued based on multiples of earnings before interest, taxes, depreciation and amortization (EBITDA). Size is a key factor in arriving at a price; for example, the greater the assets under management (AUM), the higher the multiple. Other key factors include the quality of your team, the firm’s historical organic growth rate, the average client size, the amount of liabilities/debt on the balance sheet and the firm’s profit margins. Client relationships also play an integral role in the valuation process. In addition to the firm’s total number of clients and the revenue they bring, buyers will conduct due diligence to assess the strength of client relationships.

If your firm’s value is lower than you expected, a valuation can help you understand what factors are driving your firm’s value and also help identify aspects of your firm that you can focus on in the short term to build its value. Valuation can help you understand where you need to go and how to get there.

3. Consider Your Alternatives

If you’re considering selling to another advisor in your practice, planning far enough in advance is important to make this a feasible option. Options for selling your firm include selling the entirety of a business, pursuing a partial sale or taking on a minority stakeholder. In addition to selling, another option is outsourcing internal RIA services, such as technology, asset management, financial planning and marketing.

Find and Evaluate Buyers

If you determine that your best option is to sell your firm, developing a working model that meets your needs is important. Due diligence is a vital part of your search for a potential buyer. Your motivation for selling your firm will guide your search for the right buyer. Answering the questions below can help ensure you align culturally with a buyer.

  • Do they have the financial resources to make the purchase?
  • Do they have adequate transition services?
  • Do they have the capacity to serve your clients effectively?
  • Do they offer similar products and services?
  • Do they share your values and investment philosophy?
  • How do they manage their people and their client relationships?
  • Will you and your advisors work effectively with the buyer and their team?

4. Prepare for the Sale

Having a comprehensive data collection is one of the factors that will help the sale process go smoothly and help you maximize the value of your firm. This includes having up-to-date financial statements, recent and historical AUM and performance records, growth trends, customer profiles and more. Having the data ready before you start connecting with buyers enables you to respond to potential buyers’ queries with accurate information and in a timely manner.

Take a Team Approach

An experienced M&A team, comprised of professionals and firms who have a deep understanding of the wealth management industry and are experienced at conducting mergers and acquisitions, can help prepare and guide you through the sales process and transaction. Consider hiring an investment banker to manage the sale process and an M&A attorney to assist with negotiations and review and draft deal documents. You will likely need an accountant or tax advisor to help facilitate due diligence and determine the tax implications of the deals you pursue.

Final Thoughts

Deciding what’s best for you is not a one-size-fits-all decision. That’s why at the WAA, we offer two options to optimize your business – our TAMP model helps get your business in shape and running smoothly and profitably. Our IAR model allows you to join our team in a much larger organization so you can focus on what you enjoy doing. Contact us, and we’ll be happy to discuss what option aligns with your needs.


We help advisors establish and grow successful wealth management practices. To learn more about how we can help you amplify your life’s work, contact us at You can follow us on Twitter@theWAAlliance and on LinkedIn.

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