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Eight Questions RIAs Should Ask Before Doing a Deal

Eight Questions RIAs Should Ask Before Doing a Deal

Making the decision to sell or merge with a larger wealth management firm can be a decision fraught with peril. Here are questions to ask to facilitate the process.

For owners of a Registered Investment Advisor (RIA) practice, making the decision to sell or merge with a larger wealth management firm can be an experience fraught with peril. It is typically the largest transaction an advisor will ever be involved in, and it’s likely to be one of the most important and stressful decisions of their business life.

As someone who has done north of 70 transactions of wealth management businesses as head of acquisitions for United Capital, I’ve seen a lot.    

There are many factors which will determine whether a possible acquisition is mutually beneficial, not the least of which is whether both companies are a cultural fit, and if there is a shared vision on how the wealth management industry will play out in the coming years.

But assuming there is a suitable match, financial considerations will loom large in all future negotiations, and will greatly impact the long-term success of the partnership/transaction.

Candidly, I am astonished by the lack of rigor and understanding of what sellers eventually own when equity is part of the proceeds. This isn’t a judgment about intellectual capacity but rather an honest observation about what is understood and known. What’s the adage? You don’t know what you don’t know.

Most buyers of wealth management businesses are private equity-backed and operated by really smart people with really big Excel models. They also have very complex capital structures via their capital raise and funding process. Sometimes this complexity and engineering doesn’t end well.

That’s why it’s imperative for sellers to remain cautious and vigilant because, though it’s not always reported in the media, there are numerous zombie roll-ups or roll-ups that have imploded, due partially to burdensome capital structures and/or flat out poor execution.

My hope is that these high-level questions empower sellers to move through a transaction with a greater sense of understanding and, ultimately, to transact with a greater sense of confidence that the equity they own has a better chance of performing.

This is by no means a complete list and many of these subjects are worthy of further analysis (in future blog posts I intend to address several of them in greater depth).


  1. Is there access to 3 years audited P/L and Balance Sheets from your company?
  2. What are the details of your ownership structure?
  • Who owns what?
  • Who has what rights?
  • What rights will I have?
  • If there are different share classes, what are the various traits of each share class, and which share class will I own?
  1. How is the stock valued that I will own, does a 3rd party do the analysis and can I get a copy of the report?
  2. What is your debt structure like and what rights do the debt holders have?
  3. What are the plans to create liquidity?
  4. Where does the rate of return come from and how am I participating?
  5. What is your business strategy and how will you create more value for all shareholders?
  6. What are you spending on corporate overhead to ensure that the highest quality platform is being created and delivered?


Matt Brinker is head of national partner development at United Capital.  He’s responsible for growing the firm via strategic partnerships and acquisitions of select wealth management companies around the county. Follow him on twitter: @mkbrinker

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