The RIA M&A market in 2025 enjoyed another record-breaking year for deal volume, with 276 RIA transactions, according to a new report from Advisor Growth Strategies. The industry also set a high-water mark for valuations, with the median coming in at 11.6x adjusted EBITDA.
But as the RIA industry operates with unprecedented success, creating fantastic outcomes for many participants, the abundance of activity has put middle-market RIAs — with $500 million to $5 billion in assets under management — firmly in the crosshairs, the report said.
If market conditions remain favorable, the challenge ahead for sellers is to align as a fit for the desired buyer to maximize value. A measurable gap exists between the firms that command a premium and those that do not.
"While transaction activity continues at unprecedented levels, this year's research highlighted the pressure on middle-market firms," Brandon Kawal, an AGS partner and lead author of the report, said in a statement.
"Talent is driving acquisitions, equitization is no longer optional and buyers are focused on long-term incentive alignment. We expect the gap between average and premium valuations to continue to widen — this matters for every firm."
For the report, AGS collected transaction data from November to January. It also fielded a 21-question survey in early 2026 to identify advisors' preferences on running, managing and growing their firms.
Next-Gen Partnership
Middle-market firms will be forced to either grow and scale, or sell to a larger platform, the report said. The shifting landscape for sellers is primarily centered around next-generation talent. More than half of the firms surveyed have established next-generation partners.
Equity is the key tool in the now-fluid succession construct.
According to the report, the average transaction last year included 29% equity, and buyer case studies indicate that the average expectation for 2026 is 33%. Some of the most evolved buyers said they would go so far as to include equity incentive for the next generation above and beyond deal consideration, even though this could come at the expense of a premium valuation.
Elevating and managing an equity table is no longer optional for sellers who expect a premium valuation. More importantly, the shifting buyer model is putting talent in the bullseye, both in M&A and day-to-day recruiting.
RIAs must decide whether to invest in talent now or pay later, the report said. The succession construct is now fluid, and investment in partnership is no longer optional.
The report noted that the biggest barrier to building that partnership structure is the next generation's willingness or ability to buy in. Firms that effect that compromise with their team today will be in a stronger negotiating position tomorrow. Those that do not will either pay a premium at exit,or struggle to find a buyer.
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