Blueprint Financial & Barnes Young Wealth Advisors Merge to Scale Exit-Planning, Executive Benefits and Succession Services
A multi-phase, SRG-led transaction expands national capabilities and strengthens leadership continuity PORTLAND, OREGON / January 7, 2026 / Succession Resource Group (SRG) is pleased to announce the completed merger of Blueprint Financial Group and Barnes Young Wealth Advisors, effective October 1, 2025. The combined firm will operate under the name Blueprint Financial Group, carrying on the success of each firm, as two of the top-performing teams at Northwestern Mutual. The merged practice expands capabilities in exit planning, executive benefits, tax-efficient wealth management, and multi-generational planning for families and closely-held businesses. The transaction was implemented as a multi-phase plan that integrated new equity partners, realigned internal ownership, and culminated in a statutory merger to consolidate governance and operations under a single, scalable entity. The combined firm will maintain offices in Louisville, Paducah, Richmond, Boston and Washington and will operate with approximately 55 team members. The combined practice plans to add 15 advisors over the next couple of years while retaining existing leadership with co-founders Ted Shanahan and Nick Hammelman. “This merger accelerates our growth plan and strengthens our Louisville presence,” said Ross Berge, CFO and Partner of Blueprint Financial Group. “By combining teams and processes we’ll hire and onboard high-quality advisors faster, expand our exit-planning and executive-benefits capabilities, and provide more consistent, tax-aware solutions for closely held business owners.” “Blueprint was already focused on the closely held business market, so joining forces was an opportunity to increase specialization, expand resources, and enhance outcomes for clients,” said Aaron Young, CEO and Partner of Blueprint Financial Group. “The goal is really to continue to advise this market – that’s been our vision for a long time.” SRG facilitated the merger, assisting with the business valuations, contract drafting, coordinating with the parties’ counsel, developing an optimized tax strategy, transaction structuring and integration work required to execute the plan. SRG’s technical design included tax-deferred contribution mechanics, evaluation of partnership-level adjustments to optimize post-merger tax attributes for partners, and entity/financing structures to support partner buyouts and continuity. “Achieving this merger within the desired timeline was possible thanks to both teams’ collaboration, transparency, and shared sense of purpose,” said Nicole Frey, Director of Team Solutions at SRG. She went on to share, “Their willingness to address both quantitative and qualitative aspects with grace and good humor exemplified why this partnership is destined for success.” About Succession Resource Group Succession Resource Group is an M&A consulting firm serving independent financial service professionals across the country. SRG’s team of experts leverages its industry expertise and best-in-class resources to help registered investment advisors, securities professionals, agents, and accountants manage, grow, and realize the value of their businesses. With decades of experience on the team, Succession Resource Group has helped thousands of clients value, protect, grow, improve, and plan for the sale of their business. Media Contact:Succession Resource Groupmarketing@successionresourcegroup.comwww.successionresource.com
Multi-Billion Dollar Firms Merge to Expand Tax and Multi-Generational Wealth Capabilities Nationwide
Succession Resource Group facilitates merger uniting 35 advisors, 86 staff and 21 offices nationwide, expanding advanced tax, estate and multigenerational planning services. PORTLAND, Ore., December 2, 2025 (Newswire.com) – Succession Resource Group (SRG) announces the completed merger of Heritage Wealth Advisors and AGP Wealth Advisors, combining two of the largest teams on the West Coast into a powerful, expanded enterprise focused on tax strategy, estate planning, and multigenerational service, now managing over $8 billion for clients across the United States. This partnership brings together two nationally recognized firms with aligned values and a shared mission – to help clients live with purpose and make the biggest possible impact on their families and communities. The merger was led and facilitated by SRG, the nation’s leading consulting firm for independent financial advisors and RIAs. The combined firm will be led by Erin Scannell and Mark Traut (Heritage) alongside Griffin Meyers and Randy Linde (AGP). The merger combines Heritage’s specialist model – delivering advanced tax, estate, and trust strategies – with AGP’s powerful network of CPA and estate planning firm partnerships. The combined team has 35 financial advisors and 86 support staff and will maintain all 21 of the existing office locations across the U.S. Together, the unified team will offer clients a broader and deeper bench of specialists, expanded planning capabilities, and enhanced resources, including wellness and education programs. “Heritage and AGP decided to join forces because we recognized a rare alignment, not just in values, but in vision,” said Erin Scannell, CFP®, CLU®, ChFC®, AAMS™, CEO of Heritage Wealth Advisors. “Both teams are deeply committed to helping clients move from success to significance, sharing the belief that financial planning is at the heart of helping our clients get more out of life.” Adding to that sentiment, Griffin Meyers, Partner at AGP Wealth Advisors, shared his perspective, “Our goal has always been to deliver the highest level of strategic guidance and service to our clients. Partnering with Heritage allows us to broaden that mission, deepening our expertise, enhancing operational efficiency, and positioning our team to have an even greater impact on the families and businesses we serve.” The firms engaged Succession Resource Group (SRG) in March 2025 to provide strategic guidance and transaction support, working with both teams and their respective tax and legal counsel. As the merger progressed over multiple quarters and began to evolve and change beyond the initial term sheet, SRG’s Team Solutions division, led by Nicole Frey, CFP®, and supported by Jessica Otero, worked closely with both firms to realign the framework, optimize the entity structure, and ensure the transaction was executed in a tax-efficient and compliant manner. Through a tailored restructuring strategy designed to mitigate tax exposure and streamline integration, SRG helped both firms successfully navigate the transition. Leveraging SRG’s priority access, the project reached completion by October 2025, underscoring SRG’s reputation for precision and efficiency in high-value, time-sensitive transactions. “This merger reflects what’s possible when strong teams collaborate toward a shared goal,” said Nicole Frey, Director of Team Solutions at SRG. “Heritage and AGP approached this process with clarity, professionalism, and a commitment to the future they saw together; it was a privilege to help structure a merger that supports their continued growth and long-term success.” About Succession Resource Group Succession Resource Group is an M&A consulting firm serving independent financial service professionals across the country. SRG’s team of experts leverages its industry expertise and best-in-class resources to help registered investment advisors, securities professionals, agents, and accountants manage, grow, and realize the value of their businesses. With decades of experience on the team, Succession Resource Group has helped thousands of clients value, protect, grow, improve, and plan for the sale of their business. Media Contact:Succession Resource Groupmarketing@successionresourcegroup.comwww.successionresource.com
Succession Resource Group Named a Finalist in the ThinkAdvisor 2025 Luminaries Awards for Thought Leadership and Education
Portland, OR – September 24, 2025 – Succession Resource Group (SRG), a leading consultant of end-to-end advisory solutions for RIAs and advisors, is proud to announce being named as a Finalist in the 2025 ThinkAdvisor LUMINARIES Awards in the category of Thought Leadership & Education, Advisory Support. This achievement represents SRG’s 2nd finalist honor and 3rd overall award from ThinkAdvisor. The ThinkAdvisor LUMINARIES Awards recognize organizations and individuals that are driving meaningful impact, innovation, and progress across the financial services industry. This year’s finalists represent some of the most influential and forward-thinking leaders shaping the future of advice. This recognition reflects SRG’s industry-leading commitment to delivering accessible, actionable education that empowers advisors to grow, protect, and transition their businesses. Over the past year, SRG has expanded its impact through: Monthly webinars, reaching hundreds of RIAs with guidance on valuation, entity design, compensation, contingency planning, and succession strategies. Complimentary multi-city workshops, developed with leading partners, delivering practical education on valuation fundamentals and deal readiness. The Fine Print podcast, which brings candid interviews and expert insights to a national audience. The ninth annual Advisor M&A Review, which analyzed 176 completed advisor-to-advisor transactions representing over $13.3 billion in assets, providing the industry’s most credible, data-driven benchmarks. SRG’s recognition as a Finalist also honors the work of its seasoned team of experts, including David Grau Jr., MBA, Julia Sexton, CVA, Kristen Grau, CPA, CVA, CEPA, Nicole Frey, CFP, Parker Finot, Ryan Grau, CVA, CBA, and Todd Fulks, JD. Together, they continue to elevate the advisory profession by offering education that is measurable, scalable, and replicable across all firm sizes and affiliations. “This honor reflects the depth of expertise and passion our team brings to supporting RIAs and advisors every day,” said David Grau Jr.. “By making real-world, data-driven education freely accessible, we aim to help advisors make smarter decisions, serve their clients better, and build lasting enterprise value.” The ThinkAdvisor LUMINARIES Awards celebrate firms and individuals driving meaningful, positive change across the financial services industry. The winners will be announced December 4, 2025. For the complete list of finalists, visit: https://event.thinkadvisor.com/luminaries-awards/2025-finalists About Succession Resource Group Succession Resource Group (SRG) is an award-winning consulting firm dedicated to supporting independent financial professionals across the country. We leverage decades of experience to provide a comprehensive suite of services, including valuation, M&A, succession planning, and practice management solutions. Our mission is to empower financial professionals at every stage of their business journey, helping them navigate complexities, maximize value, and achieve their long-term goals. For more information, visit SuccessionResource.com.
JourneyTree Transitions to Mainsail Financial Group Through SRG’s Seller Advocacy Program, Marking 2nd Sell-Side Represented Transition with Mainsail Financial
Portland, OR – Jonathan Brandt, founder of JourneyTree, LLC (JourneyTree), a fee-only Registered Investment Advisor (RIA) based in the Pacific Northwest, transitioned his RIA to Mainsail Financial Group, LLC (MFG), a rapidly growing fee-only RIA headquartered in Bellevue, Washington. This transaction, facilitated through Succession Resource Group’s (SRG) Seller Advocacy Program (SAP), marks MFG’s second successful acquisition through the program in less than a year, further solidifying SRG’s role as an industry leader in advisory firm transitions.. A Proven Model for Seller Success The sell-side engagement with Brandt was a streamlined and highly effective process, completed over a 9-month period. JourneyTree’s impressive metrics—$73.79 million in assets under management (AUM), 99.59% recurring revenue, and 90 client households – positioned the firm as an exceptional acquisition target. Additionally, JourneyTree’s highly qualified Client Service Manager, Jennifer Paterson, and Brandt’s desire to sell-and-stay, added further value, making the transition a seamless opportunity for MFG. “This was more than just a sale—it was about finding the right people to continue our work and values,” said Brandt. “SRG was my pillar and voice throughout this major life transition and I’m so grateful to have connected with them.” SRG’s Seller Advocacy Program has earned a reputation for ensuring successful transitions for sellers, focusing on both financial and emotional outcomes. SRG’s 9-Step process includes buyer screening, negotiating optimal deal terms (incorporating financial metrics and key qualitative factors), and creating a comprehensive transition plan that ensures long-term success for sellers, buyers, and clients. Outstanding Outcomes for Sellers, Buyers, Staff, and Clients Brandt’s business drew significant interest, with 69 buyers initially expressing interest. After thoroughly screening, 16 buyers were selected based on their fit, financing capabilities, and follow-through. The transaction resulted in a gross revenue multiple 8.94% above industry average, or a 7.45x earnings multiple, with 90% of the purchase price paid in cash. Brandt also secured an 18-month paid consulting agreement to ensure a smooth transition of client relationships. Key elements of the transaction included: Retention of JourneyTree’s Eugene office location Retention of Ms. Paterson, JourneyTree’s licensed employee Assets remaining at Schwab Advisor Services MFG established a new custodial relationship with Fidelity Clearing and Custody SRG’s Leadership in Seller Advocacy Brandt’s successful transaction underscores SRG’s unwavering commitment to seller advocacy. “Our primary objective is to preserve our seller’s legacy by connecting them with the right buyer, guiding the seller through every stage of the process, and negotiating a deal that ensures a healthy financial future. “For most sellers, these transactions are more than just money – it’s about finding a quality buyer who will honor the seller’s legacy and continue caring for their clients,” said Kristen Grau, Director of Seller Advocacy at SRG. For more information on SRG’s Seller Advocacy Program, visit https://www.successionresource.com/seller-advocacy/, email sales@successionresourcegroup.com or call (503) 427-9910
Inside Information: Valuation in a Down Market
August, 2023 Click here if you don’t see the article Disclaimer This article was first published by Bob Veres. The original article can be found here. All rights to the original content are held by Inside Information.
RIA Intel: Big Winners in Wealth Management if Biden Weakens Noncompete, No-Poaching Agreements
December 15, 2020 Biden wants employees to have more freedom to seek new jobs. Financial advisors stand to gain. A new White House administration might make it easier for financial advisors to switch employers. President-elect Joe Biden has signaled in the past that his administration would go after noncompete and no-poach clauses that are ubiquitous in financial advisory contracts. “Companies should have to compete for workers just like they compete for customers,” Biden said in 2019. These clauses “suppress wages” and impede the ability of employees to change jobs, he said. However, indications suggest that the incoming administration won’t take a sledgehammer to these restrictive clauses, instead retaining some “that are necessary to protect a narrowly defined category of trade secrets,” according to a SHRM (Society for Human Resource Management) report. Most advisory firms use these clauses to keep employees from taking their most valuable asset — clients’ contact information and assets — with them to competitors. Hence, the non-solicitation clause, which prevents them from luring clients elsewhere for a year. [Like this article? Subscribe to RIA Intel’s’ twice-weekly newsletter.] Wealth management executives told RIA Intel that alterations to these noncompete and other clauses could encourage valued employees to switch jobs. Alterations, however, could result in contractual changes that limit employee mobility. If these contractual clauses are weakened by the incoming administration, as expected, financial advisory firms will likely boost pay, encourage equity participation, and do everything in their power to retain staff. Valued employees, especially those with an enviable roster of clients, will be more marketable and able to more easily switch firms. They also may receive more perks from their current employer to stay. Several sources contacted by RIA Intel recommend a wait and see approach. Louis Diamond, an EVP with Diamond Consultants, a Morristown, N.J.-based recruiting and consulting firm, specializing in the financial industry, says it’s difficult to predict the effect of potential changes in financial employment contracts because “the devil is in the details.” Diamond questions if proposed adjustments will apply to “only new agreements or existing ones and what the loopholes are.” Noncompete clauses are often nearly unenforceable because their ultimate effect is to prevent an advisor from plying her trade and that often entails legal push-back, he adds. Diamond says non-solicitation clauses, in which employees are prevented for a year from reaching out to current clients to bring them to a new firm, play a more pivotal role at most wirehouses and RIAs. But if these clauses are reduced or limited, it could curtail future M&A activity, predicts Diamond. “If I sold you my firm, and you paid me money for it, I’d sign a noncompete and non-solicitation clause because that’s the only way a buyer can protect his investment.” Bob Cooper, a partner at King & Spalding, a Washington, D.C.-based law firm specializing in antitrust issues, notes that challenges to these noncompete clauses have existed for years, citing high-profile civil settlements in tech and healthcare. He notes that employment law varies state to state. “If there is a conflict between federal and state laws, federal laws control.” These issues don’t usually involve a conflict of law, but are more concentrated on regulatory enforcement. Some states will be more aligned with the Biden administration and some will contest these clauses. David Grau Jr., the president and CEO of Succession Resource Group, a Lake Oswego, Or.-based firm that helps individual advisors evaluate the equity in their practices, says changes could pressure advisory firms. If employees can switch firms more easily because of less restrictive employment clauses, “It’ll stifle the industry’s ability to scale their business.” As a result, most owners will be more reluctant to “expose their book of business to additional risk” and be “less interested to train the next generation of professionals. And we already have a succession planning crisis.” Grau expects that independent financial firms will lose value if these measures are implemented. “It will make businesses less scalable, because of the risk of staff leaving and taking confidential information with them.” However, Grau sees a potential benefit. More firms will be encouraged “to share equity so your employees never want to leave.” Advisors who are more experienced with the largest roster of clients will be most in demand, Grau expects. Those in large financial centers like New York City and San Francisco will be most affected since there’ll be ten other shops in proximity vying for them. “But you have less risk of being poached, if you’re based in Wichita, Kansas.” Diamond expects adjustments will be made to minimize contractual changes and that savvy attorneys will develop new clauses that restrict the ability of employees to jump ship. A change would greatly affect the RIAs and advisors with the most clients, and the most lucrative ones, Diamond asserts. They would be more in demand without these restrictions. Grau expects that changes would affect both larger and smaller firms. “Their most valuable asset is the client list of your relationships. If you make it easier for someone to take your most valuable asset away, it will affect everyone, big or small,” he asserts. If consulting the Biden administration, Grau would advocate for eliminating noncompete clauses so employees could change firms more easily. But he’d maintain the non-solicitation agreements because “firms should have a right to protect their trade secrets.” Diamond favors changing these clauses. “Advisors being able to move freely is a positive. Of course, there are bad actors. But if an advisor is acting in the best interests of their clients, they should be able to freely find better work.” He acknowledges that his outlook could be self-serving since limiting these clauses could lead to more work for recruiting firms like his. Diamond, however, doubts that a major overhaul would allow advisors to freely take clients elsewhere. Attorneys, he predicts, would draft contracts differently and establish new loopholes. Although changes to these clauses will likely
How to Buy the Right Practice — Not a Lemon
August 26, 2020 By: Mark Elzweig You’ve bested the competition, a seller’s accepted your bid to buy their advisory practice, but do you really know what you’re getting? Is there a way to ensure that you’re not overpaying or that there won’t be any big and unpleasant surprises after the sale? Understand the Seller’s Psychology As always, it pays to understand the seller’s psychology. While it’s rare for a seller to intentionally conceal critical blemishes in their practice, it’s important to recognize that they usually don’t see them. This is because they really care about their practice and often can’t see any of its flaws or imperfections, according to David Grau, Jr., founder and CEO of the Succession Resource Group. “They love their business, it’s their baby, and no one wants to think they have an ugly baby,” Grau explained. Also, keep in mind that you as the buyer are responsible for conducting the due diligence to ferret out any and all issues. Check Out Diamonds in the Rough Buyers also should recognize that many sellers may have begun slowing down years before they decide to sell and haven’t been growing their practices. “They have been coasting on fee-based revenues generated by a cadre of loyal clients and simply don’t need to work as hard or as much,” Grau explained. “[When] ready to retire, their business development has simply become playing golf with their best clients. Still, many seemingly stagnant practices have tremendous potential for growth, and number crunching alone may not uncover these opportunities. Buyers are looking for the “embedded opportunity” in a prospective advisory firm, which is tough to define until the buyer has started meeting with clients. A firm with regular client appreciation events and a loyal, enthusiastic client base can be advantageous. For instance, well-heeled prospects that clients have brought to past events but the firm didn’t follow up with make for good contacts. In other words, there’s great potential business here that hasn’t yet been fully tapped by the seller. Have a Serious Due Diligence Process Once a buyer and seller have agreed upon a sale price, the buyer typically has a few weeks to take a deep dive into the nitty-gritty of the seller’s practice. A prudent buyer usually will need to engage outside experts to help him scrutinize the practice. The process is akin to hiring a home inspector to review a potential real estate purchase, says Grau. During this period, a prospective buyer may hire an accountant or investment banker to help ensure that no stone is left unturned. Even transactions between friends require serious due diligence, Grau adds, emphasizing that buyers shouldn’t take anything at face value. These are small businesses, and running a small business can be messy at times. Others agree. “There’s no substitute for time,” said Michael Wunderli, managing director of the investment banking firm Echelon Partners. A hands-on process of wide-ranging conversations with advisors and staff at a prospective firm is a must. “This is the biggest insurance against getting a lemon,” explained Wunderli. Dig Into Three Areas Also, there are three key areas that purchasers need to meticulously vet: firm finances, the structure of the firm, and the nature of advisor and client relationships, said Wunderli. Look at the quality of a firm’s earnings and assess the profitability of its core wealth management business. Are earnings being generated by a large non-repeatable transaction, like the sale of private placements or old computer equipment? Or are they tied to ongoing fee-based revenue? Acquirers need to be cognizant of the structure of the seller’s firm,too. Who owns the client relationships? “Figuring out if the clients will stay is 90% of it,” according to Wunderli. A larger firm with client relationships that it developed and regularly contacts via a team of product specialists has more of a lock on its clients than a firm with multiple advisors who source their own clients and devise their own investment programs. Both types of advisors should be given backend retention bonuses and should optimally be excited about staying on after the sale, because of the new firm’s expanded platform capabilities. It’s important to have a thorough picture of the firm’s clients. What is the age profile? Does the firm have multi- generational relationships? What does the client concentration look like from a revenue standpoint? What’s the typical wallet share per client? Plus, potential problems in the way the deal is structured deserve scrutiny. For example, if two or three clients control 50% or more of the firm’s assets under management, can the buyer speak with them before the deal is done to see if they plan to stay? Sizing up a potential practice for an acquisition demands a serious commitment of both the purchaser’s time and their financial resources. Make sure you’re fully prepared to do what’s necessary to enhance your chances of success. Mark Elzweig is head of Mark Elzweig Company, a New York-based executive recruiting firm. Disclaimer This article was first published by Mark Elzweig. The original article can be found here. All rights to the original content are held by thinkadvisor.com.
WealthManagement.com: Should I Stay or Should I Go?
August 2020 By: Kristen Grau, CPA, CVA, CEPA The M&A market for Registered Investment Advisors (RIAs) was poised to be a record year in 2020 based on yearend 2019 data, with volume, valuations, and deal terms reaching all-time highs. Fast forward three months and COVID-19 has eroded most of the 2019 gains in most mar-kets, and the M&A market for advisory practices was no exception leaving many advisors reeling and re-evaluating their options and timeline. As an advisor thinking of phasing out at any point in the near future, many have found themselves balancing their original timeline with recent changes to their revenue and profitability, long-term market outlook, and their willingness to adapt to new compliance requirements such as Reg BI. Given current market conditions, the question is, what will produce the best outcome for an exiting advisor and their clients – do they sit on the sidelines and try to time the market to maximize value, or pursue a sale today? There are a variety of reasons to delay selling: Too much going on with the business A passion to continue serving clients The owner is in good health and not ready to give up control Unsure about post-retirement plans Concerns regarding retention of staff Concern clients won’t transition to a new advisor Concern a buyer may not deliver on the same caliber of service to clients Too much debt on the books or a forgivable loan outstanding Don’t want to have to change broker-dealers, custodians, etc. No compatible or capable buyers in the local market Value of the practice may not be high enough to retire Whether an advisor considers delaying a sale for one or a combination of these reasons, selling the business now remains the safest option as all of the aforementioned elements are normal considerations navigated as the deal is put together. Selling now may not only be the best solution for clients and your role as a fidu-ciary, but it may also protect the seller from waiting and being exposed to changes in tax rates or an increase in the cost of capital for buyers. According to William McCance, chairman and president of TAG Group, “Most advisers without a succession plan recognize the potential perils of not having one, but without motivation to retire, advisers may feel they have plenty of time to plan, even when they are beyond the typical retirement age. It’s time for the aging army of financial advisers to follow their own advice when it comes to their businesses . for their clients’ sake, as well as their own [1].” The most compelling reasons advisors are considering a sale today instead of putting the sale off: Current demand and valuations remain strong despite short-term market movement Buyers remain well-capitalized and interest rates remain at all-time lows Long-term capital gains rates are at all-time lows and expected to increase The age of a seller’s clients will only get worse the longer they wait Reg BI will lead to many new sellers flooding the market in 2020 and 2021, changing the buyer-to-seller ratios Based on current data from Succession Resource Group, and substantiated by other third-party sources, the market for advisor practices remains a robust seller’s market, even in spite of COVID-19 and recent market fluctuation. The value of an RIA has not been materially reduced due to the recent and sudden (and hopefully short term) decline in the market. Steve Levitt, Managing Director of Park Sutton Advisors, shared a timely quote in a recent article, stating, “The inherent value of RIAs is the same as one month ago” [2]? Based on SRG’s annually published data, the average value of practices continues to be at an all-time high [3]. For those considering selling, it is also important to understand how value is assessed. The value of an RIA is not based on one month or quarter, or a simple multiple on revenue based on the rolling 12 months. Qualified valuation analysts review historical revenue and expenses, looking at both short and long-term trends with both topline revenue and net income, and use this information to estimate the future earning potential. While values have not changed in the short term, the financing terms of the deal have changed given the new risks in the market. Given current market conditions, the upfront cash component is now typically 50%-80% of the total deal depending on the size of the book, size of the buyer, and expenses of the combined companies. This is down slightly from the average 80-100% before March 2020. The result is a portion of the purchase price is paid out of cash flow after closing. The upside to deferring payments into later years is the ability to mitigate taxes and potentially keep the payments at a lower tax rate, in addition to earning interest on the money. According to Cerulli Associates, the average age of a financial advisor is 55 years old, and only 30% have formal succession plans – despite 2/3 of RIAs who would like to transition within five years. Based on SRG’s recent deal data, there has been a consistent trend year-over-year of buyers retaining the seller for an elongated transition period, allowing for a smoother transition and higher retention rates. This trend has been driven by advisors becoming more proactive with their exit plan and has been exacerbated by the current market conditions. There has been a consistent trend towards creating greater continuity for the clients, with buyers now typically retaining the seller for two or more years, the seller’s staff, and assuming the current office location. Both buyer and seller want to eliminate risk in the deal, and when market conditions are tur-bulent, that becomes critical to long-term success. Advisors are very good about helping clients understand the perils of trying to time the market. The same concepts apply to the eventual sale of an advisory business – timing the market typically does not produce
WealthManagement.com: The Future of Advisor M&A
August 2020 By: David Grau Jr., MBA Since the close of Q1 2020, we have seen consistent unrest, including market turbulence that has put many advisors, their relationship with clients, and their investment strategies, to the test. Fortunately, it is times like now that highlight the work advisors do for their clients, much of which is unnoticed when markets are steadily improv-ing. The relationship between the advisor and their clients is the bedrock of value in an RIA, regardless of the amount of AUM, revenue, or profitability. And, while 2020 won’t be the best year for advisors, the inherent value of RIAs seems to be one of the few things unaffected by COVID-19. But, like throwing a pebble into a pond, we will see the ripple effects of 2020 on the M&A market for years to come. Short Term Impact Advisor M& A activity was on a record-setting pace in 2019, with 2020 expected to be more of the same. Then COVID-19 happened. Deals that reached the letter of intent stage largely persevered despite COVID-19 and markets suddenly declining. However, the pace of sales slowed as buyers reevaluated offers to account for the newfound uncertainty and potentially declining revenue. Even buyers with a longer-term outlook and stomach for short-term risk were forced to reevaluate as their lender became understandably more conservative. As April ended and nerves had calmed, advisors began picking up where they left off with their deals. Despite a short-term decline in revenue through June, valuations remained consistent with year-end 2019 expectations, climbing 3.3% on average through the first half of 2020 from an average multiple of revenue of 2.72x in 2019, to 2.81x YTD 2020. However, there has been a lasting effect on deal structures, with most deals now containing a clawback feature, and an average down payment of 60% (down from an average of 83% in 2019). Based on Succession Resource Group’s data, 85% of RIA purchases in 2019 used an industry lender, and with the low interest rate environment, SRG expects this number to reach 90% of all deals by the end of 2021. With more lenders every year, increased deal volume, and each lender having unique loan programs, resources such as LendingWell, will play an increasingly important role ensuring advisors find the right financing solution. Beyond 2020 The COVID-19 impact on advisor revenues rebounded much quicker than initially anticipated, which is expected to act as a catalyst for those advisors who were considering a sale at any point in the next 1-3 years. Kristen Grau, CPA, CVA, SRG’s Listing Director, anticipates increased deal volume as early as this summer based 1) COVID-19 and recent market conditions creating unrest with advisors; 2) Increased compliance challenges (Reg BI and the DOLs proposed new standards for example; 3) The graying of the industry and aging cliens; and 4) A lack of succession planning. Looking into 2021 and beyond, SRG expects multiples of revenue or earnings to continue to increase, but at a much slower pace as the market sees a significant increase in smaller practices coming to market. Offsetting this appreciation is the expectation that capital gains tax rates and interest rates will rise, driving up the cost of capital and making the near term the most viable time to exit the business for any advisors looking to maximize value and eliminate uncertainty. Disclaimer This article was first published by David Grau Jr., MBA. The original article can be found here. All rights to the original content are held by wealthmanagement.com.