In the wealth management sector, the adage that timing is everything carries particular weight when it comes to mergers and acquisitions. A misstep can unravel years of effort, while a well-timed deal can unlock significant synergies. Industry leaders recently shared their perspectives on how to identify the right moment to buy or sell a firm, focusing on readiness, financial metrics, and cultural alignment.
Derek Bruton, managing director and head of M&A at Modern Wealth Management, argues that sellers should consider exiting when they have built a substantial operation but face hurdles to further scaling—such as expensive hires, additional resources, or a robust succession plan. Waiting beyond that point, he warns, may leave value on the table. For buyers, Bruton emphasizes that market conditions are less critical than platform readiness. “If your platform isn’t ready to absorb and elevate a firm on day one, you’re not ready,” he said, adding that the best acquirers can unlock value immediately after close. The right time, he concludes, is when both parties see independence as riskier than the deal.
This advice comes amid a surge in M&A activity. According to a Cerulli report released earlier this month, 54% of RIAs are currently seeking an acquisition, a share that has grown steadily. The opportunity is significant: RIA firms with at least $5 billion in assets under management increased their share of the total RIA marketplace to 54% in 2024, up from 34% in 2018. Bruton advises buyers to focus on momentum rather than growth alone, seeking alignment in client philosophy. Key metrics include strong recurring revenue, solid EBITDA, real net new revenue growth, and a healthy client base. However, he stresses that upside potential—such as leadership depth and next-gen talent—matters more than past performance. Legacy technology, he notes, does not kill a deal but adds complexity.
Allen Darby, CEO of Alaris Acquisitions, recommends that sellers begin preparing three to five years before their intended exit, ideally when partners are between 45 and 55 years old. He advises addressing potential detractors two to three years ahead to optimize the business before going to market. With the unknowns of artificial intelligence looming, Darby suggests that sellers currently three to five years away should accelerate their timelines. Beyond cultural fit, he identifies net new asset growth—organic growth stripped of market performance—as the single most important metric, because it drives buyer returns post-partnership. Other key factors include a healthy recurring-revenue mix, a blended fee rate of roughly 70 basis points or above, EBITDA margins between 30% and 60%, and manageable client age and concentration. Buyers also weigh second-generation leadership for continuity and a clean compliance record, as they inherit the seller’s ADV history. Straightforward, scalable investment strategies are preferred over exotic ones that pose compliance and diligence risks.
Craig Hundt, CEO of Prairie Wealth Advisors, emphasizes that timing depends on the objectives of the firms involved. In Prairie Wealth’s recent merger with The McEwen Group, Hundt ensured sufficient time to work through details before closing, allowing clients and staff to acclimate. He sought next-generation advisors with the ability to attract new business—what he calls “rainmakers”—and experience with complex planning situations. The merger, announced last month, created a combined firm overseeing more than $1 billion in client assets, serving mass affluent, high-net-worth, and ultra-high-net-worth families. Hundt also advises firms to pay attention to accounts with lines of credit and to coordinate with alternative investment managers on custody processes before data transfer.
For advisors navigating M&A, the consensus is clear: readiness, organic growth, and succession planning are paramount. As the market evolves, those who prepare early and align strategically are best positioned to capitalize on opportunities. For further insights, see Benchmark-Reliant Asset Managers Risk Obsolescence as Systems-Level Investing Gains Traction, Study Finds and Private Equity Splits as DPI Becomes Key Metric; PwC Flags Structural Divide.
