RIA valuations: recurring fees, the client book and who has to consent
- What assembling it costs in your own time
- $2,730
- Hours to assemble the whole pack
- 36
- Hours a week to be ready in time
- 5
Every figure here comes from the figures you enter and the method stated beside it: your document count, your own hourly worth, your expected price. This site publishes no valuation, no tax position and no legal opinion; what a clause means for your deal is your solicitor's and your accountant's.
A registered investment adviser is valued as a book of recurring revenue with a regulatory wrapper around it, and both halves of that sentence change the number. The revenue is unusually forecastable, which is why these practices trade well. The wrapper decides how the deal can be structured, who has to agree to it and how long it takes, because advisory contracts do not simply move with the business. This page is about what an acquirer prices and what a seller should have ready. It does not value your practice, which is your own valuer's job.
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What an acquirer is actually buying
Recurring fee revenue, the clients it comes from, and the people those clients believe they are dealing with. An acquirer looks at revenue by client and the share sitting with the largest households, the split between asset based fees, planning fees and anything transactional, the age profile of the client base, and net new assets over the last few years. A book that is large and old is worth less than a smaller one that is still growing, because decumulation is a forecast a buyer can read.
Client consent is the part that decides the structure
An advisory contract cannot generally be assigned without the client agreeing, so a purchase either asks every client to consent or is structured so that no assignment occurs. That is why so many of these deals are share purchases, why they carry long transition periods, and why a large part of the price is usually paid over time against retention. A seller who has not thought about how consent will be obtained is not ready to negotiate terms, whatever the headline figure is.
The regulatory shape a buyer checks first
Which regulator you answer to, and whether that changes on the deal. A mid-sized adviser may register with the Commission at assets under management of at least $100,000,000 and must generally stay registered until assets fall below $90,000,000, with a buffer to $110,000,000 for the decision to register at all (17 CFR 275.203A-1). A buyer also reads the Form ADV disclosure history, the compliance program and the advisory agreements themselves, because an inherited disclosure item is an inherited problem.
What to assemble before the first conversation
Revenue by client and by fee type for three years. Net new assets and attrition, by year. The advisory agreements, with the assignment clause found and read. The Form ADV and the disclosure history. The compliance manual and the last review. And an honest note on which relationships belong to the firm and which belong to an adviser who may or may not stay, because that single distinction moves the retention assumption the whole price is built on.
Will it do what you need for RIA valuations?
Tell us where you are in selling your business and what you are trying to keep track of.
RIA valuations: common questions
Why are advisory practices priced on recurring revenue?
Because that is what survives the sale. Asset based fees billed quarterly against a stable client base are the most forecastable revenue in professional services, which is why a buyer will pay more for them than for the same money earned transactionally. The corollary is that revenue which is not recurring is discounted hard, and mixing the two in one figure is the fastest way to lose credibility in a negotiation.
How much of the price is usually paid at completion?
Less than sellers expect, and the reason is consent and retention rather than distrust. Because clients must generally agree to the arrangement, a buyer is exposed to attrition in the first year or two, so a meaningful share of the price is commonly tied to what stays. The negotiation worth having is about how retention is measured and over what period, not about the headline multiple.
What is the single biggest thing a seller can fix in advance?
Owner dependence in the client relationships. A practice where clients deal with a team and a process transfers; one where they deal with you does not, and every buyer prices that difference. Introducing a second adviser into the relationship well before a sale is slow work and it is the work that changes the number.
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Keeping what you make
The checklist is free. Pro is what happens once a buyer is actually asking: the documents go in as records, each request is tracked against the person who made it, and every version carries the date it was shared, so nobody has to remember which copy anybody has.
- Download the pack as a file you can send on
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