“There are no shortages of opportunity to sell a financial advisory business,” says Matt Matrisian, senior vice president of Strategic Initiative sat AssetMark, which provides investment, relationship and practice management for those firms.
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Indeed, M&A activity in the RIA space continues to increase and, according to David DeVoe, is on track to set another record year for the number of transactions. “The key is finding the right match,” says Matrisian.
But before the matchmaking begins, RIA firms and their owners need to understand why they want to sell and what they hope to accomplish with a sale, says Matrisian.
Setting the Goals of a Sale
Do they simply want to monetize the business and sell to the highest bidder so that the firm’s owner can cash out and leave? Or does the owner want to stay involved firm as a co-owner or operator-advisor for the long term or short term during a transition period before leaving?
“We’re finding that many sellers want to monetize their business but still want to stay involved,” says Matrisian, whose firm helps pair buyers and sellers in the advisory space.
Buyers too can benefit from the continued involvement of the seller. If a seller has a strong client base and remains involved in the new firm, the loyalty of those clients will more likely transfer to the new firm as well, says Matrisian. But ”if the seller has customers and not clients with a deep relationship to the firm, that’s a red flag for the buyer,” says Matrisian.