This is the 25th installment in a Financial Planning series by Chief Correspondent Tobias Salinger on how to build a successful RIA. See the previous stories here, or find them by following Salinger on LinkedIn.
Registered investment advisory firms are growing rapidly through M&A deals, but that doesn’t mean every RIA should pursue an acquisition strategy.
In fact, the record flow of M&A transactions and size of RIAs these days add up to a challenging competition for buyers, who must persuade potential sellers they offer the best financial terms and setup for their clients and teams, experts told Financial Planning. Any RIAs seeking to wade into the ocean of dealmaking among financial advisors and the wealth management industry must “clearly articulate a vision for the future of the RIA they’re trying to build,” based on factors such as product mix, services, geography, transaction structure and investment strategy, said Carolyn Armitage, a longtime industry executive and dealmaker who advises RIAs as the founder of Wealth Management Consulting.
Lacking that foresight, a lot of otherwise successful RIAs “go out and try to stumble through” their initial attempts at dealmaking, Armitage said. “When firms or leaders have a demonstrated vision that other people can follow, their success is so much easier to rally around than those who say, ‘Oh, I want to have $1 billion in assets,’ or, ‘I want to have $5 billion in assets,'” she added. “To have another advisor join you, it takes more than just being successful in your own right. … Making sure that fit is right is often one of the most difficult elements.”
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Lots of announcements, too little information
The number of calls and emails from interested parties and the fact that the volume of M&A deals in 2025 had surpassed that of a year earlier by the end of October could easily distract anyone from the careful planning involved with the most effective transactions. The regular deal reports from investment bank and consulting firm Echelon Partners on all industry M&A and the more specific numbers involving only RIA deals from strategic advisory firm DeVoe & Company have each reported the already higher totals this year. Lower financing costs tied to the Fed’s rate cuts and private equity-backed consolidators presenting bigger potential scale and healthy valuations for midsize firms are driving the faster flow, according to DeVoe CEO David DeVoe.
“RIA M&A isn’t just active — it’s evolving. And it’s shaping the future of the industry in real time,” he said in a statement. “The consistency of activity confirms that M&A is now embedded in the DNA of the RIA space. This is not a temporary spike, but a durable element of how leading firms grow and transition.”
A constant stream of announcements and headlines may be obscuring the fact that the deals could reflect goals as different as succession planning and massive growth, according to Harris Baltch, a managing director and co-head of investment banking with RIA services firm Dynasty Financial Partners, where the firm’s Investment Bank unit teamed up with recruiting firm Diamond Consultants to launch the Breakaway Investment Banking Initiative last month for teams considering their options in leaving wirehouse and regional firms. The strategic partnership could help address the questions faced by even the largest breakaway teams.
“It’s not lost on any of us that the type of information asymmetry that is out there is really just getting steeper and steeper,” Baltch said. “They need an investment banking team to help facilitate really complex issues.”
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Financing and the technical details
One of them revolves around the financing of deals. The ample sources of deal financing among traditional lenders like banks and the increasingly acquisitive private investors eager to tap into the reliable returns of RIAs nevertheless still require “substance over projection” for firms embarking on M&A growth, said John Langston, the founder and CEO of investment bank and M&A advisory firm Republic Capital Group.
“It’s crucial that you get one opportunity executed, because that then becomes your landmark for people to know and understand,” Langston said. “The response rate on the outreach today is low because there’s so much of it. Owners of companies are just inundated with messages. You need a strategy and a plan to start to have people call you, and that requires a strategy and bigger thinking.”
Carolyn Armitage
For financing, traditional lenders “will be financially better off for you” than selling part of an RIA’s equity to an outside investor, but “a successful acquirer may reach the ceiling limits of debt that they can borrow,” Armitage noted. They shouldn’t even bother with securing the necessary capital, though, unless they are ready for the “dog and pony shows you need to put on, the calls to participate on Zoom and in-person” and the sheer amount of time it takes most deals to go from attracting some interest among both parties to the closing date and the transition of assets, she noted. And that last part could also slow down future deals: Armitage is working with a firm that has $1 billion in client assets and vetoed a potential buyer.
“That intentionality just cannot be undermined, it really needs to be thought through,” she said. “They don’t have the capacity to take on this firm because of some of the other deals that they’ve already done.”
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From compensation levers to pitch decks, buyers need to be prepared
Another aspect relates to the compensation from cash, equity swaps and the payout from future earnings, which are three levers that “really dictate everything that you see in the confines of all the different types of deals out there,” Baltch said. The key components of those negotiations with sellers could include “taking a fresh look at their equity stack in order to recut the deck more effectively” for their future leadership under a succession plan and measuring the degree to which the acquiring firm will become more valuable through the deal, he noted.
“If you can’t structure the deal in an accretive way, then something’s off,” Baltch said. “You’re really looking at the numbers and understanding that deals that are not accretive are going to make it very difficult to obtain appropriate financing.”
The interaction of all of the different elements that could come into play for first-time buyers explains why that possible new strategy could take a great deal of time to develop. That’s why Langston warns RIAs to avoid the temptation of beginning M&A conversations over lunches with potential sellers until they’re ready for everything involved with the transactions. Instead, they may be better off spending the lunch hour working on their future business plan.
“The process of producing your deck to tell your story forces you to answer a lot of the questions that you need to before you go out there,” Langston said. “You need the same patience for the practice as the game.”
