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Succession Resource Group is a boutique succession consulting firm based in the Pacific Northwest, serving clients across the country. SRG was founded by David Grau Jr., MBA in 2012 after nearly a decade of helping advisors with valuation and succession planning. SRG's team of experts leverage their industry expertise, combined with best-in-class resources, to help advisors, agents, and accountants manage the equity in their businesses...

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4 min read

2016 Advisor Merger & Acquisitions Data Press Release

Feb 20, 2017 6:29:47 PM

(PORTLAND, Ore. — Feb. 20, 2017) Succession Resource Group, Inc. (SRG) published its third annual review of advisor acquisition activity, recapping 2016 data highlights and trends, drawing on more than $46 million dollars in third-party aggregate advisor sales prices ($5.6 billion in aggregate AUM transferred). SRG presented its findings to a live audience in its presentation titled, “2016 Financial Advisor Merger & Acquisition Annual Review” providing the status of the macro environment for deals completed in 2016 (excluding data from internal succession plans) for independent Registered Investment Advisors and Registered Representatives. Based on SRG’s data, the average sale price for financial services firms held steady in 2016, with no change in the year-over-year growth in value paid per dollar of recurring revenue (referred to as the recurring gross revenue multiple), and a slight decline in the year-over-year growth in value paid per dollar of commission revenue (referred to as a non-recurring gross revenue multiple).

Over the last four years, the average multiple of gross revenue and multiple of earnings (common pricing benchmarks for financial service practices) paid for a financial services practice has steadily increased, with the recurring multiple reaching an all-time high in 2015 with an average multiple of gross recurring revenue of 2.60. Uncertainty regarding the DOL Fiduciary Rule’s impact on the industry, and the worsening industry demographics, with the average advisor in their mid-50s, caused the prediction of more advisors looking to exit in 2016 widely circulated. However, deal data from 2016 showed a higher level of confidence in the practices purchased and state of the industry than expected, with only a slight increase in activity, based on the following:

Succession Resource Group Multiple of Recurring Revenue

  • The average multiple of recurring revenue remained constant at 2.60 in 2016, the multiple of commission revenue decreased as expected (likely as a result of the uncertainty caused by the DOL Fiduciary Rule) by 10%, from 1.10 in 2015 to 1.0 in 2016.
  • Despite values paid remaining relatively unchanged in 2016 amidst greater uncertainty than in years past, buyers took on greater risk, with the average down payment increasing 5.55% over 2015, up to an all-time high of 57% of the total purchase price financed, with 60% of all the deals tracked using bank financing.
  • RIAs showed slightly higher down payments, averaging 65% cash down at closing.
  • This increase in the use of external lending from banks on the purchase of a financial service firm has changed dramatically, from 5% of the deals in 2013 using external lending, a 1,100% increase in just four years.
  • Of those using external financing (60% of the deals in 2016), the average down payment was 76%.
  • Demand for practices remains strong, with more than 50 inquiries and 10 qualified buyers for every seller SRG represented in 2016. RIAs continue to outpace the rest of the industry, with more than 15 qualified buyers for every seller.

According to David Grau Jr., President of Succession Resource Group Inc., values will likely remain constant in 2017, which, he states, is actually indicative of a strengthening market. “Uncertainty remains for buyers and potential sellers regarding the changing regulatory environment and consolidation in the small broker-dealer space. There are many older advisors ‘on the fence’ about when to sell their practice. I expect many will decide to pull the trigger on selling this year,” Grau, Jr. said. “Fortunately, there is currently unmet demand for practices and more capable buyers, due in no small part to the availability of capital to buy practices. Look for a significant increase in the number of deals in 2017, with very few having to rely on seller financing.”

In late first quarter 2017, SRG will publish its first annual M&A Deal Book, providing the most interesting data from deals completed in 2016 for independent RIAs as well as independent registered representatives. The report will provide a detailed analysis of transactions and values from 2016, as well as a comparison to historical data providing buyers and sellers with information that has until now remained inaccessible to the masses.

About Succession Resource Group

Based in Portland, Oregon, Succession Resource Group, Inc. is a boutique consulting firm committed to helping financial advisors with their acquisition and succession needs. Founded and led by David Grau Jr., MBA, a succession planning consultant for more than a decade working with financial professionals, SRG provides turnkey customized acquisition and succession planning solutions nationwide, helping both individuals as well as providing firm-wide solutions for broker-dealers and custodians. SRG’s suite of services includes business valuation, business structuring and equity compensation strategies, talent development, contingency planning, acquisition support, deal support (including personal consulting, deal structuring, tax strategies, checklists, transition packet, and comprehensive customizable form contracts), succession planning, and personalized consulting.

For more information on Succession Resource Group visit

David Pan
Marketing/PR Coordinator
Phone: (503) 427-9910

Download 2016 Financial Advisor Merger & Acquisition Annual Press Release

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David Pan

Written by David Pan