Finding the Right Match When Selling Your Firm: A Checklist

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“There are no shortages of opportunity to sell a financial advisory business,” says Matt Matrisian, senior vice president of Strategic Initiative sat AssetMark, which provides investment, relationship and practice management for those firms.

(Related: CAPTRUST and CapTrust Reunite)

Indeed, M&A activity in the RIA space continues to increase and, according to David DeVoe, is on track to set another record year for the number of transactions. “The key is finding the right match,” says Matrisian.

(Related: Banks Gobbling Up RIAs as Consolidator Field Shrinks: DeVoe)

But before the matchmaking begins, RIA firms and their owners need to understand why they want to sell and what they hope to accomplish with a sale, says Matrisian.

Setting the Goals of a Sale

Do they simply want to monetize the business and sell to the highest bidder so that the firm’s owner can cash out and leave? Or does the owner want to stay involved firm as a co-owner or operator-advisor for the long term or short term during a transition period before leaving?

(Related: Advisor M&A Growth Is ‘Subplot of a Bigger Story,’ Says Schwab’s Beatty)

“We’re finding that many sellers want to monetize their business but still want to stay involved,” says Matrisian, whose firm helps pair buyers and sellers in the advisory space.

Buyers too can benefit from the continued involvement of the seller. If a seller has a strong client base and remains involved in the new firm, the loyalty of those clients will more likely transfer to the new firm as well, says Matrisian. But ”if the seller has customers and not clients with a deep relationship to the firm, that’s a red flag for the buyer,” says Matrisian.

Attracting a Buyer

Firms that want to sell need to show how their strengths can add value to the purchasing firm. Moreover, they need to show why they are a better match for the buyer than another firm in helping the buyer meet particular goals for talent, technological innovations, expanding its client base or other specialized capabilities.

Designing a Successful Sale

“What makes a deal successful is having a transaction structure where both parties are equally invested in making the deal work,” says Matrisian.

He would  “never recommend that a buyer pay 100% to the seller” and then let the seller walk away, nor a deal where the buyer pays nothing upfront, delaying any payment until a later date, leaving the seller with 100% of the risk.

He recalled a previous “bad deal” where the buyer was enamored with the $200 million of assets of the selling firm but didn’t do enough due diligence and discovered afterward that the seller had control over just $60 million in assets; other advisors that were part of an OSJ associated with the practice had oversight of the remainder. The seller “was buying a large group of customers, not a client base.” Following the sale, several independent advisors left the firm, taking more assets with them.

The terms should be such that both parties are equally financially invested in the success of a deal and there’s an intelligent transition plan is in place, says Matrisian.

Consider the Personality Factor

Another key factor that can define whether a sale is a success or failure is the personality fit between the buyer and seller. “Nine times out of 10 it’s that not the financials that make sales fall apart but the personalities of the actual owners,” says Matrisian. “Even if they both work together for just six months there has to be a strong level of comfort and respect.”

There are many more variables that sellers and buyers need to consider when doing a deal. AssetMark offers extensive checklists for both sellers and buyers on its Business Assessment Tool website, under the Basic Resources section.


As merger interest rises, its more important than ever to know what your advisory practice isand can beworth.

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