How does the typical buyout of another RIA firm go? 1.5 times annual revenue to the owner(s) selling? 2 times? More? Just wondering about the average multiple usually paid

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^ Good stuff. Thanks

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Totally depends. How big is the ria? Does it have support staff that will stay on? How old is the average client? What kind of asset inflows are they experiencing?

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I’ve heard it runs between 1-2x and depends on type of assets (fee based vs annuity) and age of clients in the book (older they are the lower the multiple as assumes many will pass away and no assurance assets stay)

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If it’s RIA totally, you are looking at 2-2.5. If it’s a hybrid, meaning they have annuities, it would be 1 on everything outside the RIA and 2 for everything inside.

RIA only is getting a premium right now because it is so easy to transition. You don’t have BD to worry about and repapering would only be the wrap fee agreement. You can leave them at the same custodian if you want.

I’ve bout 3 practices and would much rather just do RIA only. BD purchases suck.

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Fairly large RIA $500 million + in AUM acquiring another RIA with $100 million + in AUM. Nearly all assets fee based for both firms. Roughly 1% typical AUM fee for both firms. Expectation is that the current staff stays on for each firm.

Managing partner 1 - sounds reasonable for the premium of 2-2.5 for the ease of transition.

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#'s are way off. There r many transactions at 5-6X EBITDA. But, not for solo practices or at wires, regionals or indies.

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Opp, if you are paying 5-6x, I’ll sell you mine right now and start over. My firms EBITDA is a little over 2.5MM.

When I worked at JP Morgan 8 years ago, I remember someone wanting 3x and the firm literally laughed in the firms face. They were twice my firms size.

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great question -- i'm interested in knowing too

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