The Silent Risk Healthy Advisors Never See Coming
Why waiting until you feel ready puts your practice value, clients, family, and successor options at risk—and why the strongest advisory exits happen long before you feel ready. Many advisors believe that as long as they are healthy, active, and fully capable of running their business, there’s no need to think about preparing their practice for sale or building a succession plan. The logic seems straightforward: “I feel great. I’m in control. I have time.” But this belief focuses entirely on the advisor’s current physical state and overlooks a fundamental truth of this industry: practice value, transition readiness, and successor options have nothing to do with how healthy you feel today. The most successful transitions happen years before advisors intend to slow down—not after decline, fatigue, or urgency begin to set in. Feeling healthy may make you feel secure, but it does not eliminate the long-term risks of waiting too long, losing leverage, or being forced into a rushed exit. Seller Advocacy. Your Sell-Side Partner. Sell Your Book of Business or Financial Advisory Practice with SRG See Service Separate from your own well-being, advisors often forget another uncomfortable reality: unexpected health issues frequently arise not for the advisor, but for the people around them—a spouse, aging parents, children, or even a key employee who carries critical operational knowledge. These events can demand time, attention, and emotional energy, forcing advisors to step back abruptly or reprioritize their life without warning. Even if you are perfectly healthy, life can change your timeline overnight. Feeling healthy today isn’t a reason to delay your succession plan—it’s proof that now is the ideal time to create one while you still have full control, full energy, and full optionality. In the advisory industry, where client relationships, revenue continuity, and risk exposure define the value of the business, waiting until you “need to” is rarely strategic. The truth is clear: Healthy advisors with no urgency are the ones who get the best deals and those who wait unit circumstances force their hand almost always get the worst. The Reality: Health Is Not an Exit Strategy Below are the core reasons why health—your own or your loved ones’—is not a reliable foundation for your succession timing Being Healthy Today Does Not Protect Future Practice Value Many advisors assume that as long as they feel physically strong and engaged, their business will remain equally strong. But practice value is tied to stability, not personal wellness. Buyers look for consistent revenue, low transition risk, and a clear, well-orchestrated succession path—not the advisor’s current level of energy. In fact, the healthiest advisors often receive the highest valuations precisely because they have the time and capacity to participate in a thoughtful, well-paced transition. Waiting until health changes or energy declines reduces leverage, constrains options, and introduces uncertainty that buyers notice immediately. Buyer Optionality Shrinks When You WaitWhen you plan early, you have the broadest universe of potential successors—individual buyers, teams, consolidators, RIAs, and strategic partners. This allows you to compare philosophies, personalities, cultures, financial profiles, and deal structures. But as time pressure builds, the buyer pool narrows significantly. Urgency forces advisors to choose the buyer who is available—not the one who is truly aligned. This is why advisors who wait often end up settling for deals that don’t reflect the scale, value, or legacy of the practice they built. Health Issues Among Loved Ones Can Disrupt Your Timeline InstantlyEven if you personally remain healthy, your timeline can be upended by the needs of those closest to you. The most common reasons advisors suddenly accelerate their exit have nothing to do with their own health. They include: a spouse’s unexpected medical diagnosis the need to care for aging parents emergencies involving children the loss of a key employee who carries operational knowledge These situations force advisors to shift priorities quickly. When this happens without a succession plan in place, the result is often panic-driven decision-making, lower valuations, and minimal buyer optionality. Emergency Sales Are the Most Expensive Sales Advisors who delay planning often find themselves in reactive mode: scrambling to gather documents, explain financial trends, prepare staff, and communicate with clients—all under the pressure of a shortened timeline. Buyers recognize this pressure and adjust terms accordingly. Distressed sales typically produce smaller upfront payments, more contingent structures, reduced negotiating power, and fewer protections for client and staff continuity. The unfortunate reality is that urgency signals vulnerability—and the market responds to vulnerability by lowering value. Preparing Early Doesn’t Mean You’re Leaving Early This point is widely misunderstood. Planning is not retiring. When advisors begin planning early, they gain clarity on valuation, understand their deal options, and learn what steps will actually strengthen their business over the next several years. Early planning also puts structure around the advisor’s role after closing—whether that’s two years of client introductions, part-time involvement, consulting, or an eventual clean break. Planning empowers advisors to shape their legacy while continuing to work at full capacity. Delaying, on the other hand, strips away flexibility and forces decisions to be made from a place of constraint. Early Planning Gives You Control. Late Planning Takes It Away. An advisor who plans early controls the narrative, the timing, the successor selection, the client messaging, and the economics of the transaction. They set the pace. They negotiate harder. They attract better-aligned buyers. And they protect the people who depend on the business—including clients, staff, and family. But when planning begins only after health changes or life intervenes, the advisor’s control diminishes quickly. Urgency becomes the driver. Buyers dictate terms. The timeline compresses. And optionality disappears. Early planning isn’t just advantageous—it’s protective. Are You Ready to Exit? Download SRG’s Seller Readiness eBook Conclusion: Health Is Not a Reason to Wait—It’s the Best Reason to Start Now Feeling healthy and capable does not mean you should delay your exit planning—it means you are at the perfect stage to protect your future. Early planning gives you: maximum value maximum leverage maximum buyer fit maximum time to transition clients maximum
Mergers and Acquisitions 101: M&A for Financial Advisors
Originally Published on November 18, 2020 What Exactly Is M&A? The term “mergers and acquisitions” (M&A) broadly refers to the process of one company combining with another; however, the method and legality of how these terms are processed are slightly different. Mergers occur when two organizations join together, and both parties remain active and involved on an ongoing basis. This can be done by subsequently forming a new legal entity under a single corporate name, or more simply by an existing advisor joining forces with a peer and contributing his or her book of business in exchange for a proportional share of value in the receiving party’s business. In many cases, mergers occur between two entities of approximately the same size. This allows the two organizations to combine forces and market share instead of directly competing against each other. For instance, in 2015 H.J. Heinz Company and Kraft Foods merged together to establish themselves as one of the largest food and drink companies in the world. After merging, their new business entity was named The Kraft Heinz Company. While this is obviously a much larger transaction, it is indicative of why many advisors consider merging. Acquisitions, on the other hand, are when one company purchases another entity outright and establishes itself as the new owner. This can come in the form of buying another advisor’s book of business (an asset purchase) or alternatively, buying the exiting advisor’s equity in their business. Legally, the target advisor that was acquired no longer exists, but its brand (name, website, logo, phone number, etc.) may still remain post-sale to ensure the retention of clients. An example of this is when Morgan Stanley MS acquired E*TRADE Financial in 2020 in an all-stock deal worth $13 billion. This effectively solidified Morgan Stanley amongst the leaders in the wealth management industry and gave them more technology assets, customers, and recurring revenue streams. There are a multitude of transaction structures for mergers and acquisitions. A merger may provide each advisor with partial ownership and control of the newly merged organization. Compare that with an acquisition, which results in the selling advisor being retained for a period, but usually as an employee or contractor of the acquiring firm. The lines between merger and acquisition terminology are often blurred in public-facing communications because the goal is to ensure there is a seamless transition from the client’s perspective. Who Deals With Mergers and Acquisitions? The responsibility of who manages the merger and acquisition process may vary depending on the size of the companies involved and their experience with such activities. But, it is a good idea to ensure you have a neutral intermediary, or buy and sell-side representation to usher the deal towards close and ensure all the moving pieces are being managed and discussed. It is also common to have the assistance of external counsel, such as lawyers and accountants, to conduct a final review of the transaction and documents. It is important to ensure that as the owner buying, selling, or merging, that you actively manage your external professional counsel and set clear expectations. This is critical to ensure you don’t spend weeks working with an intermediary and craft a well thought out strategy, only to have your counsel review and begin renegotiating on your behalf, resulting in you losing a deal. Attorneys and CPAs are tremendous resources, but it is most effective to ensure you have a knowledgeable industry expert who works with mergers and acquisitions daily to help the parties make fully informed decisions and avoid reinventing the wheel. Why Do Advisors Merge and Buy/Sell? The reasons for companies pursuing mergers or acquisitions will vary, but most are motivated by improving long-term prospects and potential for their business. Factors to consider when pursuing a merger or acquisition may include the ability to create a competitive advantage, diversify the customer base, expand service offerings, reduce operating costs, expand to new geographies, increase capabilities and assets, and more. In many cases, the reason to move forward with a deal would be a combination of several factors. Here are some of the most common motivations for moving forward with a merger or acquisition: Growth: Mergers and acquisitions can be a shortcut of sorts, allowing a business to expand its operations effectively overnight. Whether looking to merge or acquire strategically (expanding new service offerings for example through a merger or purchase) or economically (merging or acquiring a firm that will add more of the same type of revenue), mergers and acquisitions can quickly increase market share. Eliminate Competition: By merging with or acquiring a target company that is a competitor in an industry, a business can effectively increase their market share and potential customer base. Synergies: Mergers or acquisitions of a complementary business allows companies to combine their strengths, business activities, and differentiators to bolster their offerings and potentially lower costs. How Long Does an Acquisition Take? The acquisition process is detailed and complex; it requires many steps along the way. While each deal is different, acquisitions can often take anywhere from a few weeks (in a best-case scenario) to several months to complete. Much of the timing relies on how well both parties are aligned and how efficiently they are able to work together to move the process along. There are several factors that can impact the timeline of any given acquisition: Decisiveness: The decision-making process can take time. Each owner involved in the transaction wants to have full confidence that this is the best move to make, that the deal is fairly priced, and that there are no better options available. If there is hesitation on either side of the deal, more time and research will likely be needed to help it progress. Complexity: The transaction timeline can be impacted depending on if the target company is generally similar or different to the acquiring company, and also the level of complexity in the business structure of the company being acquired. Management: Willingness for management teams to cooperate can
Financial advisor pay is ‘one of the most powerful strategic levers’ for RIAs
By: Tobias SalingerPublishing Date: March 17, 2026 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, advisor career 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.” What do you make? Of course, any pay strategy begins with the basic amount that advisors will collect, and just as with any other profession, they will want to know how their pay compares to peers. Sexton and Grau’s presentation broke down advisor career paths into three general categories: Support advisors (less than five years in the field): Responsibilities include planning and investment tasks and starting to identify possible new clients, and compensation includes base salary, bonus and profit sharing. Service advisors (five to 10 years, CFP mark): Responsibilities include oversight of planning and analysis, delegating tasks to junior members and much more identification of new potential business, and compensation includes a base salary (a fixed amount plus some pay tied to assets under management), a bonus, profit-sharing and so-called phantom equity (deferred compensation carrying some of the same benefits as actual company stock). Lead advisors (10+ years, several certifications): Responsibilities include acting as the primary manager of client accounts, business development and the team’s staffing; compensation includes base salary with AUM-tied pay, a bonus and an equity grant or purchase opportunity. In terms of the dollar value of the compensation for those types of advisors, it varies significantly. Support advisors make total salary and bonus pay of between $50,000 and $85,000 per year with a median of $65,000; service advisors make total salary and bonus pay of between $66,964 and $120,000 per year with a median of $90,000; and lead advisors make total salary and bonus pay of between $108,000 and $235,750 per year with a median of $159,902. 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 financial-planning.com.
Why Relying on Your Broker-Dealer to Sell Your Practice Is a Costly Mistake
Why your broker-dealer is not a neutral partner in your exit, and why home office referrals often fail. Many advisors believe that when it’s time to transition their practice, their broker-dealer’s home office team will actively help them sell their business. After years of interacting with relationship managers, home office consultants, practice management specialists, and OSJ leadership, it’s natural to assume that: They know your business. They know your goals. They care about your success. They’ll help you find the right buyer when you’re ready. Seller Advocacy. Your Sell-Side Partner. Sell Your Book of Business or Financial Advisory Practice with SRG See Service Home office representatives often feel like an extension of your practice. They attend your conferences. They support your growth initiatives. They review your business metrics. Some even position themselves as strategic consultants or sounding boards. When they offer to “connect you with a few people,” it can feel like genuine advocacy. This leads advisors to believe: “My home office wants to help me transition successfully, and they will connect me with the right successor when the time comes.” But this belief is built on a misunderstanding of what the home office is designed to do. Their job is not to manage your exit. Their job is not to evaluate buyer fit. Their job is not to find you the best deal. And most importantly: Their job is not to represent your interests. Their job is to retain assets, not to help you leave. This creates a dangerous misconception for sellers, because trusting your home office to guide your exit often leads to the exact opposite outcome you want: poor successor fit mismatched introductions delays and false starts underinformed buyers reduced valuation wasted time stalled transitions and structural misalignment In other words: good intentions, bad incentives. The Reality: Home Office Teams are Not Your M&A Parter While home office professionals may genuinely like you and want to be helpful, their fiduciary duty is to their employer. Not to your sale, not to your clients, not to your employees, and not to your retirement plan. Below are the key reasons why relying on your broker-dealer to help with your exit strategy is almost always the wrong move. 1. Home Office Professionals Are Incentivized to Retain Assets This is the most important point. Broker-dealers make money from assets, production, product placement, and technology usage. When you exit your business, the firm risks losing those assets, that revenue, and all associated advisor economics. So while the home office may want to “support” you, their version of support is very specific: Keep the assets where they are. This is not the same as: finding you the best buyer maximizing your valuation protecting your timeline aligning culture and client philosophy ensuring your staff is supported giving you a clean or flexible exit Their job is to protect the firm, not enhance your exit strategy. 2. Home Office Referrals Are Strategically Motivated, Not Seller-Centric When a home office representative says: “I know some advisors I can introduce you to,” What they usually mean is: “I know some advisors we want to keep or recruit.” Home office referrals are based on: which advisors they want to retain which advisors are loyal to the BD which practices are growing which advisors they want to “strengthen” which advisors they’re recruiting which offices they want to protect from leaving who they believe will keep the most AUM on-platform These referrals are not based on cultural alignment, client compatibility, operational fit, deal structure preferences, buyer financial readiness, successor experience, or long-term service philosophy. The home office’s job is to recommend buyers who will stay— not buyers who are the right match. This is a conflict of interest hidden behind friendly support. 3. Home Office Introductions Lack Process, Screening, or Qualification The typical home office introduction is typically blind. No valuation review. No practice analysis. No buyer readiness assessment. No disclosure of buyer’s capabilities. No examination of client demographics. No buyer/seller compatibility analysis. No assessment of culture or service model. No review of deal structure preferences. No financial vetting. This creates serious problems from awkward mismatches to wasted time to repeated dead ends. Succession Resource Group has supported sellers who received zero meaningful referrals from the home office for months. Others received only one referral, and it was not even close to a fit. Some received referrals that were actually recruiting targets, not actual buyers. This is not a process, it’s a hope. Are You Ready to Exit? Download SRG’s Seller Readiness eBook 4. Home Office Support Delays Your Timeline Because home office referrals are sporadic, informal, and unstructured, sellers experience: long gaps between introductions buyers who show up unprepared deals that start but never progress repeated back-channel conversations long delays with no traction stalled negotiations transitions that fall apart after months of waiting What feels like “support” often becomes paralysis, not progress. Most advisors lose months, sometimes years, waiting for the home office introduction that will “change everything.” It rarely does. 5. Home Office is a Solid Resource. Just Not One for Finding Your Buyer Home office employees can be extremely useful for: Data gathering Pulling client segment reports Practice diagnostics Compliance guidance Technology updates Preparing transition paperwork Historical production review Team structure analysis But they shouldn’t (and often cannot) conduct a successor search, evaluate buyer financial readiness, maximize your asking price, provide neutral guidance, prepare your business for sale, protect your confidentiality, manage buyer negotiations, structure a deal, or manage your legal risk. They are support partners—not M&A specialists. And they represent the broker dealer— not the seller. 6. Advisor Loyalty to Home Office Creates Delays, Lost Value, and Damages One of the most harmful, yet least discussed, drivers of this myth is advisor loyalty. After years or even decades with a broker-dealer, many advisors feel a moral responsibility to “give the home office the first shot” before involving a professional succession partner like SRG. It sounds reasonable. “They’ve always supported me. I’ll let them try first, and if that doesn’t work, I’ll bring in a consultant later.” But this instinct, while emotionally understandable, is structurally dangerous. Here’s why: 1. By the time you realize it’s a bad plan, you’re already in too deep. Home office introductions feel promising at first. A warm conversation here. A possible peer match there. Maybe a potential buyer raises their hand. But because there is no process, no structure, and no vetting, the advisor has already invested months, sometimes a year, has shared superficial practice information, has engaged in
Phantom Equity Plan Options: Liquidation Rights (LR) vs. Appreciation Rights (AR)
Introduction Phantom equity plans allow firms to reward and retain key team members by providing an economic interest in the business without transferring actual ownership. Two of the most common phantom equity structures are Liquidation Rights and Appreciation Rights. While both align incentives with firm value, they differ meaningfully in how value is measured, communicated, and paid. Liquidation Rights (LR) A Liquidation Right provides the participant with a contractual right to receive the full fair market value of a defined number of company shares upon a qualifying event (e.g., sale, retirement, termination without cause), subject to plan terms. In effect, it mirrors ownership economics tied to the company’s overall value at the time of the triggering event, rather than only rewarding value created after the award is granted. Because it is typically event-driven, it is commonly used to support long-term retention and alignment by linking meaningful upside to major transition or liquidity milestones. How Value is Determined Each LR is denominated in shares or units Upon vesting, payout equals: Key features Tracks total enterprise value, not just growth Uses a fixed share/unit count to determine per-share value Includes built-in anti-dilution and adjustment mechanics Paid in cash and treated as compensation (or equity shares, if permitted) Best suited for Long-term reward and retention of senior leaders Succession and retirement-oriented incentives Firms seeking simplicity and alignment with entity-level valuation Appreciation Rights (AR) An Appreciation Right provides the participant with the increase in value of a defined number of units or shares between the grant date and the exercise date. It is designed to reward future growth above a baseline value established at grant, meaning the participant benefits only if the company’s value increases over time. This structure is often used to align incentives with performance and expansion, since payouts are directly tied to appreciation rather than total enterprise value. How Value is Determined Grant date value is established upfront Upon vesting, payout equals: Key features Rewards growth above a baseline value No payout if the company value does not increase Uses a fixed share/unit count to determine per-share value Can be more complex to track over time Paid in cash and treated as compensation (or equity shares, if permitted) Best suited for Performance-driven incentives Growth-stage firms Shorter- to mid-term incentive horizons Side-by-Side Comparison Key Takeaway Both Liquidation Rights and Appreciation Rights are powerful phantom equity tools—but they serve different strategic purposes. Liquidation Rights emphasize stability, clarity, and long-term alignment with enterprise value, while Appreciation Rights emphasize performance and upside growth. The right choice depends on your goals, timeline, and the role you want equity to play in motivating your team.
Succession Planning 101: Steps and Processes for Advisory Companies
Introduction All businesses, regardless of type and size, have an organizational structure that determines how the company is managed on a daily basis. While they may have all the right advisors in place for the current state of the business, it is important for organizations to make sure they have a plan in place to keep the business thriving long-term, regardless of who is at the helm. Succession planning, as both a concept and a strategy, establishes a framework for identifying and developing next-gen talent to replace the founder when she/he exits the business. What Are the Seven Steps for Company Succession Planning? While it may be difficult to predict when a succession event will (or should) take place, it is best to begin the succession planning process early enough to construct a thorough and seamless plan that facilitates both the qualitative and quantitative parts of the process. While seven to ten years before the founder’s retirement are ideal for internal succession, or two to four years for a merger/sale, timelines are often much shorter. Unforeseen events within a company, health issues, and changes-of-heart can occur, even for the steadiest of businesses and owners. This underscores the importance of defining a strategy and committing that plan to writing as soon as possible. Even if there is no inkling that changes are imminent, it is critical to begin with the end in mind since no one lives forever. Here are seven key steps to succession planning to keep in mind: 1. Determine Objectives and Clarify the Owner’s Vision: The preferred outcome for succession planning may be different for each individual business, however, the goal for most will be for the business to continue to thrive with the next generation of advisors at the helm. It is crucial to have clarity on the primary objectives within a succession plan. This could include objectives such as improved retention, sustaining long-term growth, identifying successors for key positions, defining how the plan will be funded and taxed,, and creating business continuity. 2. Identify Key Positions and Leadership Requirements: A succession plan should clearly account for the integral roles that are critical for organizational success. An assessment of the career trajectory for the employees may inform the priority each role has within a succession plan and who will assume the duties of the founder upon his/her exit. If planned retirements are in place, a succession plan can be executed with even more focus and precision. For all key positions, it should be determined what the primary skills, knowledge, and qualifications are required to do the job effectively and ensure that a business continues to run smoothly with the next generation of leadership. 3. Evaluate Organization for Potential Candidates: The organization may already have several key employees with high potential that should be considered as part of the succession plan. By identifying and developing employees to meet the requirements of leadership positions in the company, a business can proactively plan for a succession event and give employees more incentives in the process. If the firm lacks such candidates, developing an alternative strategy as a back-up is critical. 4. Create a Development Process: Organizations should always be investing in the career development of internal talent within the company. However, in the midst of succession planning, this becomes even more important. Succession choices should have a plan in place for training and development to help them grow into viable candidates for leadership roles in the organization. A company may consider having these employees take part in mentorship programs, rotating jobs within the organization, or even furthering their education with courses that will help develop a relevant skillset for the long-term goals of the succession-planning process. 5. Look Externally: While there is significant value in working to develop employees for key roles in the future, an organization should have an open mind and be willing to look elsewhere for a successor/buyer. In some cases, the best candidates for stepping into an ownership role may be found externally. External candidates may already have the necessary experience, knowledge, and qualifications to help fulfill a successful transition. This may be especially valuable in instances where the succession planning period begins on short notice with an urgency to fill a key management role. In most situations, however, a thorough assessment of both internal and external talent is part of an effective succession planning process. 6. Communicate and Implement the Transition Plan: Once the succession plans have been established, it is important to begin communicating the plan to all key stakeholders involved since this takes time. If internal employees will be the successors, they should be aware of the plan and career development path ahead of them. This open communication will also give the employees an opportunity to verify that they are interested in working towards the ownership role within the company and understanding what that means. Once the key employees are on board, the development process should begin with long-term succession in mind. Trial runs can also be beneficial for helping employees test the waters of their future role. This could include shadowing, gradually taking on relevant responsibilities, or even filling in when the owner(s) are out of the office. As the date for the founder’s eventual retirement gets closer, it is a good idea to have some extended and planned absences so the next generation has an opportunity to fill the leadership role before the founder(s) are gone for good. 7. Formalize Plan Documentation: Since succession planning requires various forms of transition and financial implications, it is important to make sure to formalize the process through supporting documentation, including a formal valuation beforehand. The succession planning will likely include the detailed written plan as well as the agreements with key employees and shareholders. In addition to these agreements, company records and documentation should be well organized to help facilitate a seamless transition within the company. As the succession planning documents are formalized and the career development of the key employees or candidates
How to Maintain Client Experience and Retain Staff When Selling to an Outside Buyer
A practical roadmap for readiness, people, and a smooth client transition Selling a financial planning practice is not just a transaction. It is a change event that touches clients, staff, regulators, technology, and your own identity as the founder. The advisors who feel best about their outcome tend to do two things well: Prepare the business like an acquirer will run it tomorrow. Communicate the transition in a way that protects trust and continuity. Why “seller readiness” is the real deal leverage Many owners think “getting ready to sell” starts when a buyer is identified. In practice, it starts much earlier, because early preparation gives you options: tax planning, negotiation leverage, cleaner due diligence, and a calmer client transition. SRG’s dissolution guidance recommends beginning 12 to 24 months before close to allow time for tax optimization, buyer negotiation, and client transition planning without rushing. A simple readiness checklist that buyers actually care about Before you name a price or talk terms, start by getting your house in order. SRG’s Seller Readiness eBook highlights several practical pre-sale actions: Verify and document internal processes. Shift as much revenue as possible toward recurring sources. Reduce overhead and eliminate long-term obligations where possible. Create documentation and manuals for core workflows. Assemble your M&A team early. One more important point: avoid casually floating the idea of selling around your network. When you are ready, leverage a structured process and an advocate who can screen candidates thoroughly. That matters because you only sell this business once. Your timeline and process should be built to protect clients and reduce the risk of a rushed decision. The transition plan is not optional Even in a strong market, sellers can underestimate the work required after the deal terms are signed. A transition plan is how you protect enterprise value after closing, because retention is where the economics are either earned or given back. A typical relationship transition often spans 6 to 18 months and can require hundreds of hours of transition-related support time. That benchmark is a useful anchor because it signals realism. Selling is not an event. It is a structured handoff. Your staff can make the deal easier or harder If clients are the revenue engine, staff are the continuity engine. They hold systems, workflows, relationships, and culture. That is why employee communication is one of the most sensitive parts of the process, with real implications for morale, reputation, and legal risk. When to tell the team In many deals, you need staff involved before a transaction is complete because due diligence requires data gathering, reporting, and operational support. At the same time, timing matters. Tell staff too early and you can create uncertainty. Tell them too late and you can fuel rumors. Clear, definitive messaging reassures employees and helps retain top talent. How to tell the team A strong best practice is to communicate face-to-face first. Avoid using email, phone calls, instant messaging, or text for the first conversation. A helpful structure is: Individual conversations first, so people can react privately Then a group discussion to reinforce consistent messaging and create a forum for questions What to say so you keep people You do not need a perfect script, but you do need clarity. Cover: why you are selling what the sale means for them what is likely to stay the same (location, roles, compensation and benefits, service model, workflows) the expected timeline (due diligence, close, what happens after) Also consider retention bonuses for key employees and incentives for the added workload your team takes on during due diligence. Lack of buy-in can create friction for buyers and the deal. Client communication: protect trust with sequencing and clarity Clients do not need every detail. They need confidence, continuity, and a clear plan. Effective communication maintains trust and continuity, reinforces what will remain the same (services, relationships, points of contact), and outlines next steps and timeline. Plan first, then execute Communication planning is a phase, not an afterthought. Key pre-work often includes: identifying stakeholders developing a notification timeline drafting the client letter with buyer collaboration preparing transition paperwork building call scripts and meeting plans Be mindful when sharing client-specific information. Only disclose what is necessary for service delivery or compliance purposes, and protect sensitive data throughout the process. Sequence communication to reduce confusion A practical sequence is: regulators custodians clients This sequencing helps ensure you are prepared to support the transition when clients hear the news. Timing expectations that reduce surprises Written notice typically goes out immediately after close, and should not be delayed. For key relationships, plan to call priority clients, schedule introductory meetings with the seller and buyer, and then provide transition paperwork. Operational continuity: the unglamorous details that keep clients calm A transition can fail because of small operational mistakes that create friction for clients. Office and system updates matter, such as: redirecting phones and emails forwarding websites and ensuring portals work updating access controls and permissions keeping workflows stable during the handoff One important caution: implementing changes too early can create privacy issues, confuse clients, and create costly reversals if the sale does not close. Compliance and wind-down: avoid avoidable risk after a sale A sale does not eliminate your obligations overnight. Recordkeeping, data security, and regulatory procedures still matter after close. Maintain records for the required statutory period and secure client data appropriately. Also remember that regulatory filings do not automatically dissolve the underlying business entity, and filing too early can create problems during the account transition. Your stakeholders matter, but they need to be used at the right time Sellers should not do this alone. The right stakeholders improve outcomes and reduce risk, including: staff legal counsel tax and accounting professionals trusted partners who can provide perspective an experienced advocate to manage the process and screen buyers When used correctly, the people around you do not create noise. They create clarity. Conclusion: sell with clarity, not urgency
Larger firms, rising multiples: Is this the new standard for advisor M&A?
By: Steve RandallPublishing Date: February 9, 2026 The M&A landscape for financial advisory practices is heating up, with 2025 emerging as a year of larger deals, richer valuation multiples and more complex terms. According to the latest industry benchmarking report from Succession Resource Group, drawn from 171 completed transactions totaling more than $14 billion in assets under management, there’s a clear shift away from small, relatively simple handoffs to deals marked by deeper capital structures, advanced financing and a heavier presence of institutional buyers. Among the most notable trends in 2025 was a meaningful uptick in multiples paid for recurring revenue and profitability. Transactions valued on an EBITDA basis averaged 9.98x business earnings, while recurring revenue books commanded an average of 3.27x. This increase continued a pattern of expanding valuations seen the prior year, reflecting strong buyer confidence despite broader macroeconomic uncertainty. One quarter of deals paid above 3.5x recurring revenue, with more than one in five surpassing 4.0x, a sign that strategic acquirers are willing to pay premiums for quality revenue streams. Third-party financing also played a larger role in closing deals, rising to 56 % of transactions as interest rates steadied and lenders grew comfortable extending leverage. In many cases, bank and broker-dealer financing now supports up to 70-80% of purchase prices, with sellers taking back notes on the balance. SRG’s data shows a pronounced decline in deals involving buyers from outside the seller’s home state, dropping to 24.8 % from a prior peak. At the same time, the buyer base has become more concentrated around experienced acquirers, reducing the ratio of buyers to sellers and suggesting more competitive processes. SRG’s President David Grau Jr. attributed rising valuations to the caliber of practices on offer and the financial discipline of buyers. “The valuations paid today are higher than they’ve ever been before, but the same core fundamentals still apply – the deals have to cash flow.,” he said. “Sellers can get a higher value than we’ve ever seen, but it is paid for large (multi-billion-dollar RIAs), well-run firms, and the value is paid ‘on terms’ meaning most of that value is contingent.” Who’s buying? Internal equity transactions, where succession occurs via sales to existing partners, expanded to 32% of all deals, reflecting a maturing succession planning ecosystem within advisory businesses. At the same time, nearly half of firms making internal transitions brought in outside capital to support equity buys by next-generation leadership teams. SRG also observed that earn-outs are increasingly used to bridge valuation expectations and share risk between buyers and sellers. Large private equity groups and aggregator platforms continued to invest aggressively, often structuring deals with smaller initial cash downs and significant future equity or earn-outs. These flexible structures are enabling sellers to access above-market valuations while remaining tied to growth outcomes. The SRG team forecasts continued expansion of M&A activity in 2026, albeit with a focus on larger, well-capitalized buyers and fewer but higher-value deals. Creative deal terms, innovative financing and a continued premium on firms with robust financial performance are expected to shape the market. “Founders who focus on building a sustainable firm, optimizing their business, and remaining focused on the best fit for their clients at their exit will always get the best value. Period,” concluded Grau Jr. To read the full article, please visit: https://www.investmentnews.com/ria-news/larger-firms-rising-multiples-is-this-the-new-standard-for-advisor-ma/265188 Disclaimer This article was first published by Steve Randall. The original article can be found here. All rights to the original content are held by InvestmentNews.
How Firms Use Equity Stakes to Retain Top Advisor Talent, Drive M&A
By: Tobias SalingerPublishing Date: January 27, 2026 Internal transactions in which financial advisors buy equity in their firms represent a growing share of wealth management M&A deals, a new study found. Those deals boost advisors’ compensation via stakes in expanding firms, making them more likely to stay long-term. And they’re becoming more popular, according to a webinar last week held by consulting firm Succession Resource Group on its annual M&A study and hosted by founder and CEO David Grau and Parker Finot, its director of transaction advisory services. The study analyzed data from 171 transactions in 2025, including firms with about $14 billion in total client assets that Succession Resource advised, as well as other deals that used financing from Oak Street Funding and PPC Loan, which both collaborated in the study. Across M&A deals, a small group of highly competitive buyers continues to drive record valuations, leading to new highs in transaction volume. The number of potential acquirers per seller plummeted last year to 61 from 85 in 2023 and from 66 in 2024. Grau noted four main M&A trends from 2025: private equity investors’ impact on deal sizes, overall higher valuations, a smaller pool of possible buyers and a rising number of internal deals. “That’s not noteworthy in the sense that there’s more succession planning taking place,” he said. “But it’s noteworthy because most of these that we’re seeing are not supporting a partner retiring, and younger gen-two, gen-three folks buying them out. That happens too, but that’s separate. These are just straight-up purchases, buying into a firm that these advisors are working at and it’s happening a material amount of the time where we want to take note of it and share that with you today.” To read the full article, please visit: https://www.financial-planning.com/news/how-m-a-is-rewarding-top-financial-advisor-talent 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.
Everything You Need To Understand Liquidation Rights
Liquidation rights, also known as liquidation preferences, are a key element in contract negotiations for mergers and acquisitions. They determine who gets paid and when should a company choose to sell or liquidate all its assets. With a merger, liquidation rights can be leveraged in the deal once the buyer figures out the breakdown of existing parties who need to get paid. For acquisitions, it’s all about properly allocating preferred stock and liquidation preferences to investors. Liquidation Rights and Organizational Hierarchy When a corporation is formed, it’s up to the board of directors to set up a stock structure that should include executive, preferred, and common stock. Each category awards the recipient with a certain number of votes per share and a place in the liquidation queue. If venture capital is used for start-up money, the venture capital firm will typically insist that they be the first to get paid in the event of liquidation or sale of the company, ahead of debt holders or other preferred stockholders. Common stockholders get paid last. Liquidation rights also come into play in the event of a bankruptcy. In this case, as in the case of a general liquidation or sale, a company liquidator needs to unwind the complexities of secured and unsecured debt, investor liquidation preferences, and preferred stockholder allocations. It’s important to understand that the organizational hierarchy of liquidation rights can be very different from the executive or even board hierarchy of the company itself. General employees are typically issued common stock and can walk away with nothing in certain scenarios. Liquidation Preference is a Key Element in M&A Deals Researching liquidation rights should be part of the due diligence process for any merger or acquisition. When there’s a change in ownership, certain obligations need to be attended to. Among those, there could be unresolved debt or repayments to investors. This is one of those areas that bringing in an experienced MA consultant will pay dividends for you. In most cases, it’s the seller’s responsibility to meet repayment of debt obligations before closing the deal, but the buyer may inherit some of those liabilities if they are not careful. Companies only need to sell 51% of their equity shares to transfer control to another business or private entity. The remaining shareholders keep their shares, some of which may be preferred stock that holds a liquidation preference. Your legal team needs to evaluate that. Liquidation Rights for Preferred Stockholders Issuing preferred stock to select investors or partners in the firm is not a guarantee of payment in the event of a sale or liquidation. It does, however, put them closer to the front of the line. Keep that in mind when structuring an acquisition contract. To ensure liquidation rights are clearly defined, it is recommended that you utilize different classes of preferred stock. Callable shares, which can be bought out by the company prior to the next acquisition or merger, are a sensible option if investors will go for it. Convertible preferred shares can be an attractive option also, and a good negotiating tool. They can be traded for common stock using a predetermined multiplier. Issuing these as part of an acquisition strategy can be a tradeoff for guaranteeing liquidation rights. Classes of preferred stock to avoid when drafting an MA contract are participatory preferred shares and cumulative preferred shares. They each offer dividend guarantees, which can be a slippery slope. There are better ways to ensure major investors make a profit. Liquidation Rights for Common Stockholders Holders of common stock only benefit from liquidation rights when the acquisition price exceeds the sum of the guarantees made to preferred stockholders and any debt payments that need to be made before the deal can be closed. Like preferred stock, common stock can be allocated into different classes, and liquidation rights can be assigned based on those classes. This is also how voting rights are awarded. When acquiring a new company, creating these classes is your responsibility. When assigning common stock to employees, make sure there’s a reasonable vetting schedule in place to protect the company. If things don’t go well in the first few years and you have to sell, this will eliminate any liquidation rights for common stockholders. Liquidation Preference for Founders with Capital Investment A founder investing his or her own money into a company is not the same as a venture capital firm making an investment. Founders don’t have a special liquidation preference. They’re treated the same as any other preferred stockholder. To alleviate concern over this, companies can create an “executive” class of preferred stock that has better voting rights and is higher up the chain for liquidation preference. This will usually guarantee some compensation after venture capital firms are paid. Liquidation Rules for Creditors and Debt Holders In cases of insolvency, there are rules for paying off creditors when a liquidation occurs. These don’t have to be included in an MA contract, but this list should be used when negotiating a purchase or sale. The following debts should be paid off in this order. Secured Creditors with a Fixed Charge Preferential Creditors Secured Creditors with a Floating Charge Unsecured Creditors Fixed charges are assets used to secure a loan that have a fixed value, such as property or equipment. An example of a floating charge is stock, which fluctuates (floats) in value, but fixes on the liquidation date. Unsecured loans have no collateral attached and can be saved for last.