From the July 2008 issue of Investment Advisor • Subscribe!

July 1, 2008

Catching up with... Mark Tibergien

It's a good time to be a seller of an RIA firm, at least a certain kind of RIA firm, according to the latest definitive research on mergers and acquisitions activity in the advisory market. Those are some of the takeaways from Real Deals 2008, the research conducted by Moss Adams on behalf of Pershing that takes up where its 2006 study left off. Summing up, the number of completed deals reached 58 in 2007, exactly double the number reported in 2003. However, through April 2008, only seven deals occurred. Multiples seem to be increasing slightly as well.

Mark Tibergien, CEO of Pershing Advisor Solutions, provided some insights into the study, and the entire business as per usual, in an interview with Editorial Director Jamie Green on June 2.

So it's a good time to be a seller, though maybe things have slowed down lately?

It's a good time to be a seller if you have a good business. It's a bad time to be a seller if you haven't invested in your business and lack growth and earnings potential.

The firms that are well run and positioned for growth will be more appealing to a Focus Financial or a United Capital? As opposed to a Ken Fisher approach?

That's a good example of how, in the case of Fisher, it's just another way of direct marketing, since he acquires a client list and can harvest what he wants. The elegance for Fisher's offering is that it provides an option for people who just want out.

So is it a seller's market?

Yes, if you have a truly transferable entity that offers growth potential for a prospective buyer.

What about the multiples?

They seem to be going up since the last study. One of the risks of extrapolating that is that the deals that have been done since the original study have focused on some pretty high-quality firms where people are willing to pay a premium.

Is Focus Financial's acquisition of the U.K. wealth management firm Greystone Financial just an outlier? Do you expect there to be more such international deals?

For American companies, it offers some potential for growth, but there's this whole movement of IFAs, independent financial advisors, in the European marketplace, with some pretty impressive firms doing business, but they're facing the same sorts of business continuity issues.

One of the trends that might affect M&As is that larger RIA firms are acquiring smaller RIA firms. Do you expect that to continue?

Yes, and it will heat up, actually... But if you're running a small practice, making the decision to sell has to be answered from a couple points of view. First is, 'What do you need to get out of this financially?' But the other is, 'What's in the best interests of your client?' I look at this from the fiduciary standpoint. Do you think your clients are better off with you as an aging advisor? Or would you be better off aligning yourself with an organization that has greater depth and maybe even greater energy, and certainly the greater promise of continuity should something should happen to you. The one irrefutable truth is that we're all mortal, as much as we would like to deny that, and we have to come to grips with it eventually.

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