Selling Your Wealth Management Firm Is the Hardest Deal You’ll Ever Do

As a generation of founder-led registered investment advisors approaches retirement, succession planning has become one of the most critical and complex challenges facing the wealth management industry. Preparing an advisory business for a sale, capital raise, or internal transition requires far more than matching buyers and sellers; it demands rigorous process discipline, deep understanding of buyer behavior, and clear-eyed valuation expectations.

Green Sail Capital Partners co-founders Chris Gent and Ryan Kaminski draw on their extensive background building LPL Financial’s M&A advisory capabilities to share strategic perspectives on how advisory firm owners can navigate succession hurdles, optimize deal terms, and position their firms for long-term alignment.

CM: Despite record levels of RIA consolidation, the market appears to be evolving. How would you characterize today’s M&A environment compared with two or three years ago?

CG, RK: Deal volume is still setting records. We saw 167 transactions in the first half of this year, up 13% from last year. But the character of the market has changed. Two or three years ago, this was a momentum market. Capital was abundant, buyers were racing to build scale, and nearly any firm with reasonable AUM could attract multiple bids. Today it’s a discernment market. Median valuations have reached a high-water mark around 11.6x, but almost no major buyer expects multiples to climb further. The premium is bifurcating. Exceptional firms are commanding more than ever, while average firms are discovering the tide is no longer lifting all boats.

CM: Are buyers becoming more selective, and if so, what has changed in the way they evaluate acquisition opportunities?

CG, RK: The big consolidators now have clearly defined acquisition criteria, and they’re disciplined about walking away from firms that don’t fit. We anticipate this selectivity to only increase as a record number of financial advisors will be looking for exit and/or succession options through the end of the decade. Buyers are underwriting organic growth net of market appreciation, revenue per client, the age distribution of the client base, and leadership depth beneath the founder. A firm growing 10% a year because the S&P did the work looks very different under the hood than one adding new households. Buyers have learned to tell the difference, and they price accordingly.

CM: Succession remains one of the industry’s biggest challenges. Why are so many firms led by founders still unprepared for ownership transition?

CG, RK: It’s a paradox of success. Only about 42% of RIAs have a written succession plan, the lowest level since tracking began, at exactly the moment leadership transitions are accelerating. Three forces drive this. First is the affordability gap. Valuations have risen so far that only about one in five founders believes the next generation can actually afford to buy them out. Second, founders systematically underinvest in developing successors. It’s commonplace for many shops to have no junior advisors because owners can run a lean practice and take home a substantial portion of their revenue using this approach. Third, there’s a psychological component nobody likes to discuss. For many founders, the firm is their identity, and planning your own exit feels like writing your own obituary. So it gets deferred, year after year, until the options narrow to a sale. We advise that the optimal time to sell is at least five years prior to retiring.

CM: At what point should advisory firm owners begin planning for succession, even if a sale may be years away?

CG, RK: Five to ten years out, which is far earlier than most owners assume. Two of the biggest value drivers simply take time. Building a bench of junior advisors who can carry client relationships takes years, and buyers pay real premiums for that continuity because it de-risks the whole transaction. Cleaning up your books takes time too, and clean financials are what let a buyer clearly see the value they’re paying for.

But here’s what founders often miss. Most high valuation deals require you to stay on as an employee for at least five years, because those valuations come attached to retention and growth targets the buyer wants you actively helping to hit. And most private equity firms, which are the underlying catalyst for the high multiples we’re seeing across the industry, want sellers to have skin in the game. So you should expect to hold some ownership stake after the sale. Think of it as a succession partnership rather than an outright sale of the business.

That’s precisely why succession planning and sale planning go hand in hand. Deals are rarely 100% cash and walk away. When you understand you may be running the firm for another five years as a partner rather than an owner, the timeline compresses, and you realize you should be contemplating a sale much sooner than you think.

CM: What operational improvements typically create the greatest increase in enterprise value before going to market?

CG, RK: Sustained organic growth is the single biggest driver, because buyers can see through AUM that grew simply because the market did, and they pay premiums for documented, repeatable new business that will keep compounding after you’re gone. Second, look hard at the health of your client base, since buyers want net positive flows with contributions outpacing distributions. A book concentrated in clients drawing down assets is a shrinking asset no matter how large it looks today, and sophisticated buyers model that out. Third, if you still run legacy broker-dealer business, convert as much as you reasonably can to fee-based advisory, because recurring predictable revenue is what buyers are underwriting today and commission revenue almost always gets valued at a discount, if it gets credit at all.

CM: Are consolidators backed by private equity evaluating firms differently than strategic RIAs?

CG, RK: Yes, and founders should understand the distinction before entering a process. Platforms backed by private equity are underwriting a financial thesis. They focus on EBITDA quality, margin expansion potential, and how the acquisition performs inside their own eventual exit, which means heavy scrutiny of earnings durability and often more structured consideration with earnouts and equity rolls. Strategic RIAs are underwriting fit. They care about cultural alignment, client experience compatibility, and advisor retention, because they have to live with the integration forever. Neither is better, but they fail differently. The wrong private equity partner gets you a payday and a culture clash. The wrong strategic merger gets you alignment and an undercapitalized future. Know which risk you can live with.

CM: What advice would you give a founder beginning to think seriously about succession but unsure whether to sell, merge, or pursue an internal transition?

CG, RK: Start with brutal honesty about three questions. What do I want my life to look like in five years? Is my next generation capable, and can they finance a buyout? And what does my firm actually need to keep serving clients well? The structure should follow those answers, not the other way around. Too many founders start by picking a transaction type, usually whichever one a conference panel made sound appealing, and reverse-engineer a rationale. We’d also say this. Get an independent valuation and a real assessment of your options before you take a single buyer meeting. And remember these paths aren’t mutually exclusive. Some of the best outcomes we’ve seen blend them, like selling a minority stake to finance an internal transition. The founders with the best outcomes are the ones who evaluate optionality years before they need it.