How to Make a Merger a Growth Move: A 5-Step Roadmap for Advisory Firms

For many financial advisory firm owners, growth eventually hits a ceiling. Organic client acquisition slows, operational demands pile up, and the question surfaces: what comes next? Mergers have become one of the most effective strategies for advisory firms looking to scale, reduce risk, and build long-term enterprise value. But a merger done poorly can create more problems than it solves. The difference between a merger that accelerates your business and one that stalls it comes down to preparation, process, and the right professional guidance. In a recent SRG webinar, Nicole Frey, CFP®, Director of Team Solutions, and Ryan Grau, CVA, CBA, Director of Valuations, walked through the full merger lifecycle for advisory firms. Below is a summary of the key takeaways. You can also watch the full webinar recording here. Why Advisory Firms Pursue Mergers Advisory firms explore mergers for a range of reasons, and the right motivation depends on where you are in your business lifecycle. Some of the most common drivers include: Faster growth. Rather than relying solely on organic growth, merging with a partner who brings their own book of business can accelerate your trajectory. SRG’s AcquireEdge program helps firms identify and evaluate acquisition and merger opportunities with this goal in mind. Greater scale and efficiency. When two firms combine, revenue may grow at a faster rate as the combined firm expands its client base, referral network, service capacity, and opportunities to capture additional wallet share. Expenses often increase at a slower rate because core infrastructure, technology, compliance, management, and administrative costs can be spread across a larger revenue base, creating margin improvement as the firm scales. Risk reduction and continuity. Sole proprietors face significant key-person risk. Adding a partner means your clients are protected if something happens to you. It also opens the door to better succession planning and contingency planning options. (For more on why contingency planning matters in the context of M&A, see Contingency Planning: A Key to Acquisition Success.) Expanded capabilities. A merger can help you offer new services, diversify your client demographics, enter new geographic markets, or create a one-stop shop by combining with complementary practices like CPA firms. For firms thinking about strategic direction at this level, SRG’s enterprise consulting services can help map the path forward. Talent attraction. In an aging industry, larger combined firms can offer more defined career paths and specialized roles, making it easier to recruit and retain talented professionals. Improved negotiation power. Operating at a larger scale gives you leverage when negotiating vendor contracts, payout grid rates, and fee structures with broker-dealers or custodians. Step 1: Get Your Entity Structure Right Before you start looking for a merger partner, your own house needs to be in order. Your entity structure — the legal form, tax status, and organizational setup of your firm — directly impacts how a merger can be executed. SRG’s entity support services are designed to help firms get this foundation in place. (For a deeper dive, download Your Guide to Proper Entity Structure.) The two most common legal forms in the advisory space are corporations and LLCs. Frey noted that LLCs taxed as partnerships offer significantly more flexibility for mergers. In a partnership structure, a new partner can contribute their book of business in exchange for ownership without triggering a taxable event. In an S-corporation, by contrast, that same contribution is often treated as a sale by the IRS, creating an immediate tax liability even though no cash changed hands. For firms that want the flexibility of an LLC partnership and the FICA tax savings of an S-Corp election, there is a hybrid solution: an LLC taxed as a partnership at the operating level, with each partner holding their interest through an individual S-Corp holding company. It adds complexity, but it gives you the best of both worlds. The takeaway: address your entity structure before the merger conversation heats up. Trying to restructure and merge simultaneously can be overwhelming. If your entity is already in place, SRG’s entity maintenance program ensures your governance documents and compliance stay current as the business evolves. For more on how entity structure supports growth, see Set Your Firm Up for Success — Using Entity Structure to Unleash Growth. Step 2: Define Your Ideal Merger Partner Not every merger is a good merger. As Frey put it during the webinar, a merger is “almost like a marriage, just on a business level.” You want to build trust and rapport before proposing anything formal. Finding the right partner requires honest self-assessment and intentional criteria. Your ideal merger partner should be similar or complementary to your business. Frey recommended evaluating potential partners across several dimensions: Revenue sources and service model compatibility. If one firm operates primarily through in-person client meetings and the other runs on virtual engagement, there needs to be a plan to reconcile those models or you risk losing clients during the transition. Client types and demographics. Complementary client bases can be a strength, but mismatched expectations around client service intensity can become a source of tension. Growth goals. If one partner is aggressively pursuing growth while the other is winding down toward retirement, that misalignment needs to be addressed through compensation structures rather than equity adjustments, which can create IRS audit complications. Once you have identified a potential partner, start by networking through broker-dealers, professional conferences, centers of influence, and business coaches. Build the relationship before introducing formal merger conversations. (For practical guidance on early-stage partnership conversations, see Teaming Advice When Preparing for a Merger.) When the time is right, sign an NDA and begin sharing financial information through a structured due diligence process. At minimum, you should be requesting three years of financial history with a deep dive on the trailing 12 months, a breakdown of the client base (demographics, asset distribution, concentration risk), staffing levels and compensation commitments, any existing equity-sharing or profit-sharing promises, major contract terms and expiration dates, and each owner’s goals — whether growth-oriented or succession-oriented — along with their expected

Selling Your Advisory Business: What Every Owner Needs to Know (Ep. 33)

What to Expect from M&A in 2026 When you decide to sell your advisory business, you will be approached from every direction; aggregators, PE firms, broker dealers, and peers all ready to make an offer. The question isn’t whether demand exists. It’s whether you have the right team to make sure you’re getting the most out of it. In this episode of The Fine Print, David Grau Jr., MBA is joined by Kristen Grau CPA, CVA, CEPA, Parker Finot, and Ryan Grau CVA, CBA to break down what seller advocacy really means, where self-negotiated deals tend to fall short, and what advisors should look for when choosing an intermediary. You will hear why great offers never show up in the first draft, what the “auction” label gets wrong about the listing process, how some intermediaries secretly work both sides of the deal, and why getting a valuation three years before you’re ready to sell can change everything. Show Notes The noise every seller has to cut through. Aggregators, PE firms, broker dealers, peer buyers, and DIY platforms are all competing for your attention. The real question isn’t which offer to take — it’s whether you have the right expertise on your side to evaluate them properly. The risks of going it alone. Self-negotiated deals often skip NDAs, skip proper due diligence, and rely on one-page agreements that banks won’t underwrite. Sellers narrow their options to one or two familiar names and leave significant value on the table before negotiations even begin. Fit vs. price: the conversation has shifted. The industry long put fit above everything else. That’s changing. Price, terms, and taxes are increasingly driving decisions — and advisors who sell to the first familiar face often sacrifice all three without realizing it. Great offers never show up in the first draft. Eye-catching multiples often mask back-end payments tied to growth targets the seller has never come close to hitting. Knowing what to look for — and what questions to ask — is the difference between a good deal and a great one. The “auction” label is a buyer’s talking point. What sellers call a listing process, buyers call an auction to make it sound unappealing. In reality it is a confidential, structured process that lets sellers compare qualified buyers, protect their identity, and make a decision based on actual fit rather than whoever showed up first. Not all intermediaries are working for you. Some firms charge sellers a retainer while simultaneously collecting fees from buyers — limiting the pool presented and skewing the outcome. Ask who your intermediary is getting paid by and how many times they have transacted with the same buyers. Get your valuation done three years out. Waiting until you are ready to sell leaves no runway to improve your numbers, clean up your financials, or understand your KPIs. A valuation three years prior gives you time to act on what it tells you. Your business is your most valuable asset. Whether you plan to sell in two years or ten, giving the process the time and attention it deserves — with the right team in your corner — is one of the most consequential decisions you will make for yourself, your clients, and your family.  Hosted By David Grau Jr., MBA (Founder / CEO) Kristen Grau, CPA, CVA, CEPA (Executive Vice President) Ryan Grau, CVA (Director of Valuations) Parker Finot (Director of Transaction Advisory Services)

Financial advisor pay is ‘one of the most powerful strategic levers’ for RIAs

By: Tobias SalingerPublishing Date: March 17, 2026 Far from simply being a recruiting and retention tool, financial advisor compensation plans are turning into important growth and valuation engines, according to succession planning experts. Registered investment advisory firms or other advisory practices must create career paths and pay plans that evolve quickly enough to keep up with industry competition, advisorcareer advancement, geographic factors and the company’s long-term goals, according to a webinar last month on compensation trends led by Julia Sexton, the director of strategic organizational planning at consulting firm Succession Resource Group, and Ryan Grau, the company’s director of valuations. They presented the first of what will become an annual compensation study based on data from the RIAs that use the firm’s services. And the central takeaway revolved around the divergent impact among firms that have taken proactive steps, and those that haven’t. “Today isn’t just about benchmarking numbers,” Sexton said. “It’s about aligning compensation with role, clarity, behaviors, growth objectives and long-term enterprise value, because when compensation is designed intentionally, it becomes one of the most powerful strategic levers that you have in your firm and is so critical to so many transaction and business growth initiatives, succession planning, viability and just the overall cultural and financial health of your business.” On the other hand, Grau jumped in to add, failing to build an effective compensation strategy is “one of the quickest ways to derail value.” To read the full article, please visit: https://www.financial-planning.com/news/financial-advisor-pay-is-a-powerful-strategic-lever-for-rias Disclaimer This article was first published by Tobias Salinger The original article can be found here. All rights to the original content are held by FinancialPlanning.com.

Grow Your Advisory Firm Without Limiting Your Exit Options

Growth builds momentum. It creates new opportunities, expands your client base, and can increase enterprise value. But growth also forces us to build structure. Over time, that structure shapes your future transition options. Decisions around equity, compensation, leadership, client relationships, and governance can either expand your optionality, or quietly limit it. Advisors make decisions about their firm, often without thinking about the downline impact. Without intentional planning, it is easy to paint yourself into a corner through years of choices, and end up with only one viable exit option. Think of it this way: if a client walked into your office with $5 million to invest, but told you they were retiring in six days, you could still help them. But, imagine how much more you could have done if they had come to you five or ten years earlier. The same principle applies to your business and planning for your eventual exit. The firms that get the highest valuations are not simply the fastest growing. They are the ones built to be scalable, transferable, and adaptable, giving them multiple transition options. The Earlier You Start, The More You Control Every business owner will exit at some point. The question is not “if,” but “how,” and how well. The earlier you begin planning, the more control you retain over that outcome: Earlier planning leads to more transition options More options create a stronger negotiating position Better preparation leads to maximum value for the founder This is why the best-prepared firms often begin planning 10 or more years in advance. Without that runway, decisions become reactive. With it, you can build intentionally while preserving flexibility. And regardless of which path you eventually choose, internal succession, merger, private equity partnership, or external sale, the foundation you build today will determine the options available to you tomorrow. Universal Do’s and Don’ts to Preserve Optionality For advisors who are still evaluating their long-term direction, the goal is to have options and remain flexible. That means avoiding decisions that unintentionally lock the business into a single outcome, or making decisions that will provide you options. Across firms, a consistent set of patterns either supports or limits future flexibility. Ownership Structure Do: Understand how your entity structure and equity design impact future transition options. Many firms are operating with the same entity they set up when they first launched, which was adequate at the time. But, what worked then may not serve you now or in the future. As your firm grows, revisit your entity structure to ensure it is still optimal for your short and long-term succession and growth goals. Most of the time, what you had twenty years ago isn’t ideal for where you are today. Don’t: Distribute equity without buyback or bring-along provisions. If you share equity, make sure your agreements preserve the flexibility to steer the business in the direction you choose. Client Relationships Do: Delegate client service work to your team, freeing you up to mentor, train, manage, and grow the business. Also – as you hand off client relationships, ensure you have appropriate protections in place so team members can leave and take your clients. Non-competes are difficult to use and hard to enforce – there are other better ways to protect your practice. Don’t: Overcommit ownership or transition expectations without formal agreements in place. Informal arrangements may feel sufficient today, but they create significant complications during a disagreement or transition event. Financials Do: Maintain clean and clear financials over multiple years and invest in scalable growth. Predictable financials, where the chart of accounts doesn’t shift dramatically year to year, are essential for any planning or transaction process. Know your P&L. Don’t: Compensate employees at levels that undermine owner economics. A common pitfall: team members receiving variable, revenue-based compensation without bearing the risk or downside of ownership. When it comes time for those team members to buy in, the math (especially when risk-adjusted) simply doesn’t work. There is no faster way to decimate your value than to pay your advisors using a percentage of revenue on clients you assigned to them. Organizational Resilience Do: Build a team that allows the business to grow beyond the founder. Gen1 mentors and trains Gen2. Gen1 and Gen2 work to mentor and train Gen3, and so on. Whether you plan to sell internally to your team, or to a competitor, a well-staffed firm that can operate independent of the founder will unlock the best outcomes. Don’t: Assume the right transition option will materialize without preparation or that qualified team members automatically want to be successors. Desire and capability are two different things, and you need both. Legal and Compliance Do: Keep entity documents, employment agreements, and compliance records current. Every team member, especially client-facing advisors, should have a formal agreement in place. Don’t: Wait until due diligence to address gaps. Problems discovered at the ninth inning are far more expensive and stressful to resolve than those addressed years in advance. Understanding the Four Primary Transition Options Most financial service firm transitions pursue one of four paths. Each requires different preparation, timelines, and trade-offs. Internal Succession Typical timeline: 5 to 10 years (from the first sale to the last) Internal succession focuses on transitioning ownership and leadership to the next generation within the firm. To do this effectively, firms must: Recruit and retain quality advisors and leaders Mentor and train employees to become viable successors Develop leadership capabilities over time Implement equity sharing plans as part of the career track Gradually transition client relationships before the founder’s exit One of the most important things to clarify early is your “why.” Internal succession typically prioritizes legacy, continuity, control, and minimizing disruption for clients. It is unlikely to produce the highest value for the founder, compared to an external transaction, but for many founders, value is not the primary goal. “When it comes to internal succession, you should be convicted in the outcome — transferring the business to your successors rather than pursuing an external sale.

SRG Entity Support: More Than an Entity Filing

Many financial advisors assume entity formation is a simple filing, but the decisions made at the ownership, tax, and governance level have long-term consequences for how a business operates, grows, and transitions. SRG’s “Entity Support: More Than an Entity Filing” brochure breaks down the 12 areas of value included in every entity support engagement, from goal-based entity strategy and tax-focused coordination to revenue-flow design, buy-sell planning, and broker-dealer compliance support. Whether you are forming your first entity or restructuring an existing one, this resource shows how SRG’s consultant-led, industry-specialized approach helps financial professionals build a business structure designed to protect enterprise value and support long-term strategic flexibility. Download the brochure to see what a comprehensive entity engagement looks like and how it compares to a standard filing. Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form.First Name *Last Name *Phone Work Email * Would you like to join SRG’s newsletter to receive industry updates and other webinar opportunities? Yes No Download

Financial Advisor Compensation Guide for Advisory Firm Owners

Compensation is both the engine that drives a service-based advisory firm and the issue that keeps firm owners up at night. Everyone wants to pay their people fairly, but what fair looks like depends on your firm’s size, structure, growth goals, and the roles people actually play on your team. The challenge is that many advisory firms are still running compensation models that were designed for a different era; one where individual production was the primary measure of value and every advisor operated as a standalone business under a shared brand. Those models worked when the industry looked that way. For many firms, the industry no longer does. In a recent episode of The Fine Print Podcast, David Grau Jr. sat down with Julia Sexton, CVA, who leads SRG’s compensation design, employment agreements, and equity sharing services, to walk through the key decisions that firm owners face when redesigning compensation. This article distills that conversation into a practical guide — organized around the decisions you need to make, in the order you need to make them. Start with the Data: Know What the Market Is Actually Paying Before you redesign anything, you need a reliable baseline. Strategy aside, if your compensation is 40% above or below the market for similar roles, you have a problem that no structure can solve. For years, the industry relied on the Investment News / Moss Adams compensation study as the go-to benchmarking resource. It had an interactive dashboard where you could filter by firm size, region, and role. That resource was eventually shuttered, and while it has returned in a free version, it now pulls from government sources rather than industry-specific survey data — making it significantly less reliable for advisory firms. SRG developed its Talent Strategy Report (TSR) to fill that gap. Rather than relying on self-reported survey data, the TSR draws from thousands of valuations performed annually — meaning the compensation data has been vetted, reviewed on calls with firm owners, and confirmed for accuracy before it enters the data set. The report covers compensation by role, firm size, and staffing benchmarks so you can see what peers at similar-sized firms are paying and how they are staffing. A few things worth noting from the data: Location matters less than it used to. With remote work now standard at many firms, geographic premiums have compressed. Compensation for the same role is more consistent across regions than it was five years ago. Firm size does not create as big a gap as you would expect. A lead advisor at a $3 million firm and a $7 million firm often earn similar total compensation — but for different reasons. Smaller firms tend to pay more per person because each person wears more hats and larger firms requiring more bodies are able to specialize more in each role. So maybe at the core, a larger firm is ‘paying more’ for the core duties of the specific role, but the reality is that smaller firms have similar if not the same tasks and responsibilities, just shared across less people – so we don’t see this changing. You should be checking this at least annually. Compensation benchmarking is not a one-time exercise. At minimum, pull updated market data every year — every other year at the outside — to make sure you are staying competitive. The bottom line: any compensation redesign should start with current, reliable data. If you are working from a study that is three years old or based on a survey with a few hundred respondents, you are building on a shaky foundation. Choose Your Model: Grid-Based vs. Ensemble Compensation This is the foundational decision, and it flows directly from a bigger question: what kind of firm are you building? Grid-based (production-based) compensation assigns each advisor a book of business and pays them a percentage of the revenue they manage — typically 30% to 45%. It is simple, familiar, and effective at incentivizing individual production. It is the model that most of the industry grew up on, originating in the wirehouses and migrating to the independent channel as advisors went out on their own. Ensemble (team-based) compensation pays advisors a base salary reflective of their role and responsibilities, with variable bonuses tied to specific goals and behaviors, and potentially a share of firm profits. It is designed to incentivize collaboration, specialization, and enterprise value. The critical insight is that your compensation model will drive behavior whether you intend it to or not. If you pay advisors on individual production, they will optimize for individual production — even if you tell them you want collaboration. You cannot put the incentives in one place and expect behavior in another. About 95% of the teams we talk to say they want to build a collaborative, team-based firm. Yet many of them are still running a production-based compensation model. If that describes your firm, the structure and the strategy are in conflict, and compensation will win that fight every time. That said, grid-based compensation is not inherently wrong. If your firm genuinely operates as a collection of individual practitioners under a shared brand — what we sometimes call a “team in name only” — then production-based pay is aligned with that reality. The problems arise when the stated goal is collaboration and scale, but the compensation model still rewards siloed behavior. Before redesigning anything, be honest with yourself about your firm’s long-term goals and strategy. Are you building an integrated enterprise, or are you running a platform for independent advisors? Either is valid. But the compensation structure needs to match. The Hidden Cost of Grid-Based Compensation Even if a grid-based model made sense when your firm was smaller, it can become a serious liability as you grow. Here is the math that tends to catch firm owners off guard. You assign an advisor 100 households representing $100 million in AUM and $1 million in annual fees. You give them a 30% payout. They earn $300,000. Simple enough.

Equity Explained: How to Incentivize, Retain, and Transition Ownership

Watch the Replay Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form. Name * FirstLast Phone Work Email *How Did You Hear About SRG? *— Select Choice —ConferenceDirect MailExisting/Past ClientGoogle AdWordsOtherReferralSocial MediaSeminar/WorkshopWebinarWebsite Access Recording What’s the Best Way to Use Equity to Reward, Retain, and Transition Key Talent? In this webinar, Succession Resource Group’s Nicole Frey, CFP®, and Julia Sexton, CVA, break down how advisory firms can use equity more strategically to retain talent, develop future leaders, and plan for succession. The session covers the key differences between phantom and true equity, how to reward performance without creating ownership friction, and the valuation and tax considerations that come with grants, purchases, and swaps. Whether you’re evaluating equity for a key employee or rethinking your firm’s ownership structure altogether, this conversation will help you make more intentional decisions that support the long-term health of your practice. Host Nicole Frey, CFP® Director of Team Solutions Paper-plane Linkedin-in Host Julia Sexton, CVA Director of Strategic Organizational Planning Paper-plane Linkedin-in

Equity Explained: How to Incentivize, Retain, and Transition Ownership

Watch the Replay What’s the Best Way to Use Equity to Reward, Retain, and Transition Key Talent? In this webinar, Succession Resource Group’s Nicole Frey, CFP®, and Julia Sexton, CVA, break down how advisory firms can use equity more strategically to retain talent, develop future leaders, and plan for succession. The session covers the key differences between phantom and true equity, how to reward performance without creating ownership friction, and the valuation and tax considerations that come with grants, purchases, and swaps. Whether you’re evaluating equity for a key employee or rethinking your firm’s ownership structure altogether, this conversation will help you make more intentional decisions that support the long-term health of your practice. Download the Presentation Deck Here Download Speakers Host Nicole Frey, CFP® Director of Team Solutions Paper-plane Linkedin-in Host Julia Sexton, CVA Director of Strategic Organizational Planning Paper-plane Linkedin-in

Your 5-Step Merger Roadmap for Advisory Firms

The 5-Step Merger Roadmap for Advisory Firms Considering a merger but not sure where to start? This free infographic breaks down the five steps every advisory firm should follow — from strategic entity preparation to post-merger integration. Based on insights from SRG’s Stronger Together webinar with Nicole Frey, CFP® and Ryan Grau, CVA, CBA, it’s a practical, one-page reference you can keep on hand as you explore your options. Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form. Name * FirstLast Phone Work Email *How Did You Hear About SRG? *— Select Choice —ConferenceDirect MailExisting/Past ClientGoogle AdWordsOtherReferralSocial MediaSeminar/WorkshopWebinarWebsite Download

What to Expect from M&A in 2026 (Ep. 32)

What to Expect from M&A in 2026 Valuations are at record highs, private equity is changing the game, and deal structures look nothing like they did five years ago. In this episode of The Fine Print, David Grau Jr. digs into the real numbers from 2025 and breaks down what they mean for advisors navigating M&A in 2026. Show Notes RIA valuations continue climbing. Revenue multiples averaged 3.27x in 2025, with 38% of deals closing above 3.5x. EBITDA multiples have reached nearly 10x. But higher valuations are coming with different terms than the industry is used to.   Higher profits do not always mean higher multiples. Firms with 45-50% margins often get lower multiples (6-7x EBITDA) because those margins signal underinvestment. The firms earning 11-13x are the ones reinvesting in staff, capacity, and growth — even though their margins sit closer to 25-30%.   Private equity is moving downstream. PE-backed aggregators are now making offers to firms doing as little as $2 million in revenue. The typical deal structure: 40% cash at close, 30% performance-based payments (tied to 10-20% CAGR targets), and 30% rolled equity in the aggregator.   The headline multiple is not the whole story. A 12x or 13x offer from PE sounds compelling, but only about 40% arrives as cash at closing. The rolled equity may be illiquid and aggressively valued. The real question: five years post-closing, did you actually come out ahead?   Internal equity sales hit record highs. Nearly a third of all transactions in 2025 were internal fractional sales — up from single digits historically. Financing was split roughly 50/50 between seller-financed and externally financed deals.   Phantom equity is surging. Stock appreciation rights (SARs) and liquidation rights are becoming mainstream succession tools, even for firms as small as $2 million in revenue. They help attract and retain talent, seed the next generation with economic value, and make future partners more bankable when it comes time to buy in.   Compensation models are shifting. Larger advisory enterprises are moving away from grid-based payouts toward base-salary-plus-bonus structures that better fit service-oriented teams.   Deal volume is expected to rise. Elevated multiples and increased PE activity are pulling more advisors off the fence. If you are a buyer, get your house in order. If you are a seller, treat your business like a home going on the market — make sure the curb appeal is there. Hosted By David Grau Jr., MBA (Founder / CEO)