Guest: Matthew R. Crow, CFA, ASA, the CEO of Mercer Capital and leader of the Investment Management Industry team.
In a Nutshell: M&A has been one of the biggest stories in the RIA space for the last 15 years. But that span coincided with an unprecedented combination of low interest rates, a roaring market, the first wave of retiring baby boomer CEOs, and the AUM model boosting profits and valuations. As some of these tailwinds, potentially, turn into headwinds, prospective buyers and sellers need to reassess the M&A marketplace to find the right path towards their long-term growth goals and the best service models for their clients.
On today’s show, Matt Crow surveys the current state of M&A, including how deal structures are evolving, why headline valuation multiples are often higher than final sale prices, the true success rate of M&A deals, and why the wave of RIA consolidation might just be getting started.
.Matt Crow and I discuss:
- The main drivers of the recent RIA M&A environment.
- How succession planning can fuel consolidation and how institutional capital can create an alternative for founders.
- The biggest challenges and pitfalls that Matt has seen in RIA M&A.
- Comparing and contrasting M&A in the CPA and RIA spaces.
- Acquisition lessons from John Chambers’ tenure at Cisco.
- Weighing the strategic and financial benefits of M&A.
- Private versus public valuations of RIA firms.
- Is consolidation recreating the “dinosaur” wirehouse model?
- Variables contributing to the lack of organic growth in even large RIA firms.
- The factors that Mercer Capital weighs when valuing an RIA.
- Matt’s advice to advisory firm owners who are being courted for an acquisition.