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Two Firms, Same AUM, Very Different Valuations?
Private equity buyers are no longer rewarding scale alone. By Neil Turner
DESPITE THE CURRENT MAELSTROM OF ECONOMic uncertainty, the wealth management industry remains awash in mergers and acquisitions. Private equity firms are driving this consolidation, since they’ re drawn to advisory firms’ reliable cash flow and organic growth. In the first quarter alone, there were 75 transactions— an all-time high for this period, according to consulting firm and investment bank DeVoe & Company.
It’ s a Seller’ s Market— But Not for Everyone
While this is unquestionably a seller’ s market( since there are a greater number of buyers), private equity isn’ t simply throwing money at every advisory. There’ s an outdated notion that a firm’ s multiple can be determined by its assets under management and production alone. Yet two firms with identical top- line numbers can carry dramatically different valuations and levels of buyer interest. The more decisive factors are things like a firm’ s organic growth rate, its client demographics and its service offerings. With those qualities under the microscope, one firm might in fact command a premium valuation and attract multiple suitors, while another struggles for attention.
Understanding What Matters Most
Private equity firms and institutional investors use scorecards to prioritize acquisitions. The stronger a practice scores in key dimensions, the more leverage it has in choosing its partner and negotiating terms, including the firm’ s multiples. For financial advisors, the question isn’ t whether a buyer will come calling, but how to position themselves to secure the best valuation and deal structure and arrive at a transaction that makes sense for the staff and clients.
NOVEMBER 2025 | FINANCIAL ADVISOR MAGAZINE | 23