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Posted by FP Transitions on January 5, 2026

How to Get an Accurate RIA Valuation, Then Triple It

Business Value,  Interviews,  Valuation & Appraisal
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How to Get an Accurate RIA Valuation, Then Triple It
2:31

By John Manganaro

The founders of growing registered investment advisor firms are used to seeing headlines about the eye-popping valuations some of their peers have achieved in the M&A process, but the reality is that many RIA business owners have simply not done what it takes to make their organization a highly attractive (and therefore highly valuable) acquisition target.

As the CEO of the business valuation and M&A strategy firm FP Transitions, Brad Bueermann leads a team of more than 70 professionals who consult with more than 1,500 financial services firms in any given year — many of them RIA teams looking to buy other practices or to be sold themselves.

Each RIA business is unique, according to Bueermann, but there are also some tried-and-true strategies for boosting enterprise value, creating effective succession plans and ensuring any M&A transaction goes as smoothly as possible for all parties involved. Bueermann discussed these strategies during a recent ThinkAdvisor interview in New York, noting that they cut across both the practical and the ephemeral aspects of running a successful financial services firm.

Yes, the compensation structure and cultivation of intergenerational talent both matter, but so does establishing a culture of excellence and a shared sense of responsibility for elevated client service. Likewise, the formalization of business processes and the use of responsive and scalable technology has a positive effect on business value — as does a strong online presence and an intentional marketing strategy that establish a brand that resonates with both advisor talent and the investing public.

In the end, Bueermann said, each RIA firm has a unique path forward when it comes to building enterprise value and ensuring positive outcomes in the M&A process. What they all share is a need for intentional leadership, staff commitment and a vision for consistent improvement that starts well before any anticipated transaction.

“Earlier on in the business, we were only being contacted by people as they were preparing for a sale,” Bueermann said. “Today, that’s changed completely, and we are working with firms at all stages of their development lifecycle. That’s a very positive change, in my view, because it unlocks so much more potential for growing enterprise value.”

Here are some additional highlights from our discussion, edited for length and clarity:

THINKADVISOR: At a high level, can you explain how FP Transitions works with its clients and what they are generally trying to accomplish? It’s about more than just pricing an M&A transaction, right?

BRAD BUEERMANN: The business has grown and evolved a lot over time, and today I would say we have three primary focuses. One is helping firms identify value and understand what they are worth and why. The second is, how do you grow that value?

It’s funny, because that’s always the first thing that anybody wants to know about after they go through the first part. They get a valuation, and even if its impressive, they want to know, how do I double or triple that? And that leads to the last thing we do, which is helping business owners and firms to realize and steward that value. Naturally, we are a big market participant on the M&A side, helping firms to navigate that process from a financial, legal and strategic perspective.

What I believe makes us stand out in the space is that we do all of these things in a coordinated way under one roof. So, rather than an advisor getting their valuation in one place and then going to their separate accountants, attorneys and business coaches to come up with a plan to move forward, we coordinate everything very closely. We are able to bring it all together and develop a highly focused plan for them to execute on, depending on where they are in their business growth journey.

How important is accurate data and access to benchmarking information throughout the process of building value and eventually pursuing a transaction?

Very important, and we are in a position to generate and utilize so much data, given that we have supported more than 17,000 firms and advisors in our history. In fact, we have a subscription-based service that not only provides our clients with valuations, but also regular benchmarking and then advice around improvement relative to peers.

In some cases, we have had relationships that have extended over five or 10 years. We’re using our awareness of the marketplace to help our clients improve the structure of their business, modernize their compensation strategies, spreading out equity among the organization to really motivate and retain the next generation of talent — all the stuff that builds durable enterprise value.

That’s been a positive change for the industry. Early on, people came to us only when they wanted to sell, and sometimes they would be disappointed by the actual valuation they received, because they hadn’t done the hard work of turning the practice into a real business with enterprise value and a strong long-term future.

It’s a lot like retirement planning, frankly, where advisors are pushing their clients to get started early and to have a solid plan to slowly and steadily build up their portfolio value over time. We are pushing advisors to do the same thing within their practice and make the long-term investment into their processes and people.

What are the benchmarks that are most useful when deciding how to organize and evolve a firm to maximize value over time?

There’s a lot to consider. Some of the things we help to answer for clients are, what does my productivity and profitability per advisor look like relative to my peers? What am I spending on marketing relative to my peers and what’s the ROI on that? What’s my average acquisition cost for each new client coming in the door?

What I can say is that the long-term value plan and the goals of the business owner are what really help us to identify the key performance indicators. One big topic currently is modernizing compensation structures and spreading out ownership in a way that attracts and retains next-generation talent. This is clearly associated with higher growth and higher valuations.

And that makes sense, right? If you give your critical advisor-producers a piece of the ownership, they are motivated to grow the firm because they have a direct stake in building its value. It’s something that has started to evolve pretty substantially in recent years, and for the better. Earlier on, a big chunk of the independent RIA industry simply took their compensation models directly from wirehouses, because that is the world and the approach that they knew and understood — the typical eat-what-you-killed type model.

That works to some extent for independent RIAs, but if you think about it, you’re really creating almost negative operational leverage with this model when it comes to eventually selling the entity. Even as you are growing, you’re paying out more and more on the advisor compensation. Eventually you can start to compress the margins in the business and hence its ultimate value.

How are firms evolving their compensation approach to better generate compensation value, apart from spreading out ownership?

There are different approaches, but the key is arriving at a more professional compensation structure that is typically based on a salary, plus bonuses that are tied to things that are growth-related for the company overall. It has to be more than just tying payouts to AUM growth, because the markets can increase AUM significantly even if advisors aren’t producing new clients or deepening client wallet share over time.

So, if the focus of the firm is on bringing in new clients, then putting a bonus structure around doing just that makes a lot of sense. It’s not really rocket science, but you have to be thoughtful about it.

If a firm comes to you and they have a solid client base and good momentum in the business, but they haven’t fully professionalized their processes and compensation structure, how long might it take to get to a more attractive valuation?

I think it depends on the business leader, and it depends on what’s an attractive valuation for them.

As an anecdote, I can tell you that, last August, we sold a particular practice that had been a client of ours for about eight years. When they originally came to us, their evaluation was sub-$1 million, and they weren’t thrilled by that. Over time, we improved it, not in leaps and bounds but in steady steps, just working on all the changes and considerations we’ve discussed today — professionalizing the compensation, putting in place the proper marketing strategy, driving technology in the right way, being cognizant of the bottom line, etc.

Last year, we sold the firm for about $6 million. That was a great outcome that is certainly replicable, but it took eight years to achieve it. Some of the most extraordinary gains that we have seen are at firms that have come to us that had a low or even nonexistent bottom line, because they were just doing the old eat-what-you-kill model and not reinvesting in the enterprise at all. Those firms have a big opportunity to boost their value over time.

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