Executive Summary
The RIA acquisition market remains highly active, but the valuation story is changing.
After years in which expanding buyer demand, private equity capital, consolidation, and rising markets helped push advisory-firm valuations higher, buyers are signaling that broad multiple expansion may be reaching a plateau.
A recent DeVoe & Company survey found that 82% of RIA consolidators expect valuations to remain stable during the second half of 2026, while 18% expect valuations to decline. None of the surveyed consolidators expect valuations to increase.
At the same time, the market is becoming increasingly segmented. Buyers continue to compete aggressively for high-quality firms, but premium valuations are increasingly being reserved for businesses demonstrating sustainable organic growth, scalable infrastructure, leadership depth, strong retention, differentiated services, and transferable client relationships.
The result may be one of the most important valuation shifts for advisory firm owners in years:
The market for good advisory practices remains strong. The market for exceptional advisory businesses may be getting even stronger.
For owners contemplating a transaction within the next five to ten years, building enterprise value increasingly means proving that the business can continue growing after the founder is no longer responsible for generating that growth.
Practice Valuation Scoreboard
| Trend | Current Direction | BKLM View |
|---|---|---|
| RIA Transaction Activity | ▲ Strong | Activity remains well above historical norms |
| Overall Valuations | ► Stable | Broad multiple expansion appears to be slowing |
| Premium Firm Valuations | ▲ Strong | Exceptional businesses continue attracting competition |
| Organic Growth Importance | ▲ Increasing | Becoming a major valuation differentiator |
| Founder Dependency | ▼ Negative | Key-person concentration increasingly creates valuation risk |
| Alternative Deal Structures | ▲ Increasing | Minority investments and recapitalizations are expanding seller options |
What Buyers Are Paying For
August’s industry research points toward five factors becoming increasingly important in determining which advisory firms receive premium valuations.
1. Organic Growth Is Becoming the Scarcity Premium
The wealth management industry has become very good at getting bigger.
Markets appreciate. Firms make acquisitions. Advisors recruit teams. Consolidators combine businesses.
All of those activities can increase AUM.
But they do not necessarily demonstrate that an advisory business can generate growth itself.
That distinction is becoming increasingly important.
Mercer Capital’s recent analysis argues that organic growth is emerging as a significant valuation differentiator because buyers want evidence that firms can consistently attract new clients and assets rather than relying primarily on market appreciation or acquisitions.
The difference can be significant.
Consider two advisory firms that both increased AUM by 12%.
One generated most of that increase because financial markets appreciated.
The other generated substantial net new assets through referrals, centers of influence, advisor business development, marketing, and deeper relationships with existing clients.
The ending AUM may look similar.
The businesses are not necessarily equally valuable.
BKLM Take
Buyers increasingly want to know not simply how much you grew, but why you grew.
Market appreciation is valuable, but every advisory firm receives some version of that tailwind.
A repeatable client-acquisition engine belongs to the business.
That distinction can command a premium.
2. Buyers Want Growth They Can Inherit
Even strong organic growth does not automatically create maximum enterprise value.
The next question is whether that growth is transferable.
Imagine an advisory firm where nearly every new client comes from the founder’s personal relationships.
The historical growth rate might be exceptional.
But what happens when that founder retires?
That is increasingly part of buyer underwriting.
Mercer Capital notes that buyers may discount growth dependent on one founder, rainmaker, referral source, or other concentrated channel. More valuable growth systems tend to be diversified, documented, measurable, and supported by multiple people.
Buyers may therefore examine:
- Net new assets by year
- New client relationships
- Assets gained from existing clients
- Client wins and losses
- Referral-source concentration
- Prospect conversion rates
- Advisor-level production
- Business-development pipelines
- Client demographics
- Founder involvement in new business
This represents a meaningful evolution in RIA valuation.
A buyer is not purchasing yesterday’s growth.
A buyer is underwriting tomorrow’s growth.
BKLM Take
A founder who personally generates $50 million of new assets annually has created a very successful practice.
A firm with multiple advisors and repeatable systems capable of generating that same $50 million may have created something even more valuable:
an enterprise.
3. The Valuation Gap Is Widening
One of the most important developments in the current market may be the growing difference between average and exceptional advisory businesses.
RIA transaction activity remains historically strong, but recent analysis indicates that premium valuations are becoming increasingly selective. Buyers continue rewarding firms with organic growth, scalable infrastructure, institutional leadership, and differentiated service models rather than simply large asset bases.
That creates an important distinction.
The average industry valuation multiple does not necessarily tell an individual advisor what his or her firm is worth.
Two firms with identical AUM can have dramatically different:
- Organic growth rates
- EBITDA margins
- Client demographics
- Revenue concentration
- Advisor retention
- Leadership depth
- Technology infrastructure
- Service models
- Succession plans
- Founder dependency
Those differences ultimately influence risk.
And risk influences valuation.
This is why headline transaction multiples should be viewed cautiously.
The most publicized transactions often involve unusually attractive firms with institutional infrastructure, rapid growth, strategic geographic positioning, differentiated capabilities, or significant scale.
Those transactions are not necessarily comparable to the typical advisory practice.
BKLM Take
The industry may not have one valuation market anymore.
It increasingly has multiple valuation markets based on business quality.
Exceptional businesses can continue attracting exceptional offers even when overall industry multiples stop rising.
4. Profitability and Operating Leverage Matter Again
Growth alone is not enough.
Buyers also want to understand what that growth produces.
Mercer Capital’s second-quarter market update showed a notable divergence between larger and smaller investment managers. Larger traditional managers demonstrated stronger operating leverage, while smaller RIAs experienced more modest AUM and revenue growth and declining EBITDA year over year.
This reinforces an important enterprise-value principle.
Scale is most valuable when it creates operating leverage.
If an advisory firm doubles revenue but also doubles:
- Staff
- Office costs
- Technology expenses
- Management overhead
- Advisor compensation
- Administrative complexity
the economic benefit of that growth may be considerably smaller than the headline revenue increase suggests.
The highest-quality businesses generally demonstrate an ability to grow revenue faster than expenses over time while maintaining client service.
That does not mean minimizing investment.
Technology, talent, marketing, compliance, and client experience all require capital.
The objective is to build infrastructure capable of supporting the next stage of growth without requiring expenses to increase dollar-for-dollar with revenue.
BKLM Take
A buyer does not simply acquire revenue.
A buyer acquires the future cash flow that revenue can produce.
A firm capable of adding another $100 million of AUM without rebuilding its operating infrastructure may therefore be substantially more valuable than one already operating near capacity.
5. Deal Structure Is Becoming Part of Valuation
The headline purchase price is only one component of a transaction.
As the RIA market matures, transaction structures are becoming increasingly sophisticated.
Minority investments, recapitalizations, rollover equity, earnouts, structured partnerships, and traditional acquisitions are giving owners more ways to create liquidity while addressing growth and succession simultaneously.
This means two offers carrying the same headline valuation may produce dramatically different economic outcomes.
Owners increasingly need to evaluate:
- Cash paid at closing
- Rollover equity
- Earnout requirements
- Revenue or EBITDA hurdles
- Employment obligations
- Governance rights
- Future liquidity opportunities
- Tax consequences
- Advisor retention requirements
- Post-closing compensation
- Cultural and strategic fit
Private equity adds another dimension.
Capital remains abundant, but PE-backed platforms increasingly need to demonstrate that acquisitions create operational value rather than relying exclusively on aggregation and multiple expansion. Advisor retention, cultural fit, organic growth, and margin expansion are therefore becoming increasingly important after a transaction closes.
BKLM Take
Headline multiple does not equal transaction value.
An apparently lower offer with substantial cash at closing and favorable economics can ultimately outperform a higher headline valuation dependent on aggressive earnouts or uncertain future equity.
Owners should evaluate the entire transaction—not simply the number at the top of the term sheet.
BKLM Enterprise Value Insight
Many advisory owners still think about valuation primarily in terms of AUM.
The industry is increasingly moving toward a different framework.
Sophisticated buyers are effectively asking:
What exactly am I acquiring that will still exist five years after the founder leaves?
That includes:
- Client relationships
- Recurring revenue
- Organic growth systems
- Brand equity
- Advisor talent
- Leadership
- Technology
- Operational processes
- Referral relationships
- Intellectual property
- Specialized capabilities
- Institutional culture
The less dependent those assets are on one individual, the more transferable the enterprise becomes.
This may ultimately be the defining difference between a practice and a business.
A practice can generate significant income for its owner.
A business can generate significant economic value independent of its owner.
That distinction matters enormously in an acquisition.
Building Enterprise Value Before a Sale
For owners considering a transaction within the next five to ten years, the current market provides an important planning window.
The objective should not simply be to maximize AUM before selling.
Owners should consider whether they are systematically improving the factors a future buyer will evaluate.
That includes:
- Measuring true organic growth separately from market appreciation
- Developing next-generation advisors
- Sharing important client relationships across the team
- Building multiple sources of new business
- Documenting workflows and operating procedures
- Increasing CRM adoption
- Maintaining strong client retention
- Improving operating leverage
- Developing leadership beyond the founder
- Reducing revenue concentration
- Institutionalizing the firm’s brand
- Creating a credible succession plan
These improvements do more than prepare a firm for sale.
They generally create a stronger business even if the owner ultimately decides not to sell.
What We’re Watching
For the remainder of 2026, BKLM will continue monitoring:
- RIA transaction volume
- Changes in valuation expectations
- Premiums for organic-growth firms
- Private equity investment activity
- Minority investment transactions
- Recapitalization structures
- Earnout trends
- Rollover-equity requirements
- Buyer appetite by firm size
- EBITDA and profitability trends
- Advisor succession activity
- Founder-dependency discounts
- Strategic versus financial buyer pricing
One development deserves particular attention:
Whether stable industry valuations lead to greater valuation dispersion.
If overall multiples stop expanding while buyers continue competing aggressively for the best firms, the difference between an average advisory practice and an institutional-quality business could become increasingly significant.
BKLM Bottom Line
The RIA M&A market remains strong.
Capital remains available. Buyers remain active. Succession needs continue to create transactions, and high-quality advisory firms remain attractive acquisition targets.
But the next phase of the market may look different from the last.
Owners should not assume that industry consolidation alone will continue pushing every firm’s valuation higher.
Instead, buyers are increasingly rewarding the characteristics they believe can produce sustainable future cash flow:
Organic growth.
Recurring revenue.
Leadership depth.
Operating leverage.
Client retention.
Scalable infrastructure.
Transferable relationships.
For advisory firm owners contemplating a transaction over the next five to ten years, the message is increasingly clear:
Don’t simply build a larger practice. Build a business someone else can confidently own.