After analyzing 176 M & A transactions completed last year , in deals that transferred more than $ 13 billion in assets under management , the Tigard , Ore . -based consultant firm found that “ valuations appear to have returned to historical norms , increasing a modest 1.83 % over 2023 .”

This modest increase was noteworthy , the study said , partly because it showed that valuations weren ’ t particularly affected by modest adjustments to interest rates or the U . S . presidential election . “ There is a lot of noise out there around the value of an advisory practice ,” said David Grau Jr ., president of Succession Resource Group , in the firm ’ s ninth annual review of advisor acquisition activity .

That “ noise ,” he said , is making it increasingly difficult for business owners to determine reasonable valuations for M & A activity .

For valuations , the study found that nearly 63 % of the transactions were completed at between 2.5 and 3.5 times recurring revenue . “ For the first time on record ,” the study said , “ none of the deals received a multiple below 1.50 ” times recurring revenue .

The report also said demand for firms increased in 2024 , with sellers receiving an average of five offers from prospective buyers , up from three a year earlier . The average time from listing to deal completion was 129 days , “ an all-time efficiency record ,” according to the report .

Private equity and private-equity-backed firms “ remain active acquirers ,” the report said , adding that they are “ very selective , focused on specific markets , specific size businesses , and generally seeking to keep the seller involved and active for many years

Succession Resource Group said the deal volume should increase , as will the use of external capital to complete deals , especially “ if interest rates remain flat or decrease .” post-sale .” Putative buyers who do not have private equity backing were “ forced to either bring additional cash to close or adjust the purchase price to a more realistic figure ,” the report said .

Asked about their succession planning , only 1 % of advisor respondents to a Succession Resource Group survey said they had a plan already written , and 24 % said they had no plans to retire . Too many advisory business owners make the mistake of chasing a higher valuation for their business , said Grau in the report . Instead , business owners should keep “ building a sustainable firm , optimizing their business , and remaining focused on the best fit for their clients at retirement .” This , he said , “ will always win the day .”

The current flurry of M & A activity is expected to keep pace in the new year “ given the general lack of succession readiness and aging advisor workforce ,” the report said . Succession Resource Group said the deal volume should increase , as will the use of external capital to complete deals , especially “ if interest rates remain flat or decrease .”

A separate report from DeVoe & Company found that RIA mergers and acquisitions surged to new heights in 2024 , recording the highest deal volume ever . DeVoe ’ s “ RIA Deal Book ” said that last year ’ s 272 announced transactions surpassed the previous record of 264 transactions set in 2022 , a marked change after “ nearly three years of steady deal flow .”

The report , compiled in collaboration with Capital Group , only counts deals involving firms with $ 100 million or more in assets under management .

Last year ’ s unprecedented activity level was largely due to anticipation of further interest rate cuts , the report said . Following September ’ s rate cuts , the final quarter of 2024 saw the most deals of any quarter ever — with 81 transactions . October was the single most active month , with 39 transactions , which was nearly double the 21 transactions recorded a year earlier and which surpassed the previous monthly high of 33 transactions set in January 2021 .

14 | FINANCIAL ADVISOR MAGAZINE | MARCH 2025 WWW . FA-MAG . COM