Michael Belluomini, Vice President, Mergers and Acquisitions


Mergers and acquisition activity in the wealth management space is hot. What’s driving this wave of deals?

M&A gives advisors the chance to create even better practices by combining with others. Larger firms tend to generate more value through economies of scale and through teamwork versus smaller or solo practices.

In addition, roughly 37% of advisors plan to retire over the next 10 years, according to data from Cerulli Associates, and completing a deal can be part of financial advisor succession planning.

Large institutional investors such as private equity firms are also highly interested in transactions involving wealth management firms because it is a stable, growing sector.

Thanks to this influx of investment cash, our partners and contacts tell us they are receiving offers for far more than they thought possible. Instead of a valuation of two to three times revenue, some businesses are selling for far more.

Given what’s at stake, this is a decision to handle very carefully, not just for your finances but also for your clients and your legacy.

In this guide to M&A for financial advisors, we will outline how to find a financial advisor book of business for sale, the value in buying a book of business, as well as when you should consider selling your book of business and how to find a buyer.

Article Contents

Why Buy a Book of Business?

Buying a book of business can be a way to take your practice to new levels quickly and effectively. Some of the key reasons to buy a financial advisor book of business include growing your AUM, adding services to your firm’s offering, succession planning and more. Let’s break it down.

Accelerated AUM growth (inorganic growth)

Think how long it would take to add another $100 million of AUM to your firm organically – likely years, even if you already have an established sales process and team. Through a successful merger or acquisition, you can potentially bring on a book of business within a few months and enjoy the extra revenues from that point forward.

Larger firms in particular could benefit from this strategy due to their greater efficiencies and economies of scale. If you run a large firm with a valuation based at seven times EBIDTA and you acquire a smaller one valued at five times EBIDTA, you immediately create more enterprise value through the acquisition alone.

Added specialties

Through a merger or acquisition, you can expand your practice to offer additional specialty services. For example, if you’re a CFP® Professional who works in retirement income planning, you could look to bring on a tax specialist, a firm offering 401(k) small business services, and/or an estate plan attorney. Again, buying or merging with an existing practice is often a lot faster than the hiring process and trying to build up a new business from scratch. Not only will bringing on a partner or advisor with a specialty inject new clients to your firm from the get-go, it will add value that helps you better serve your existing client base. Clients like having all their financial needs handled by the same team. If you’re working solo, there’s always the risk that even satisfied clients leave for the convenience of a one-stop shop.

Expanding services can also generate referrals from happy clients and attract new clients over time.

Talent acquisition

When buying a business, the assets are important but not always the primary reason to complete a deal. The extra advisors you’re bringing on board could do even more to drive future value, especially if they have skills that complement your own. For example, perhaps you find a young advisor to serve existing clients, while you focus on new asset accumulation. This frees up your time to do what you love.

Succession planning for financial advisors

Buying a business can also help with succession planning for financial advisors and your eventual exit from your firm.

Succession planning for financial advisors is crucial for everyone involved in your business. It protects:

  • your clients by making sure they continue to have access to financial advice
  • your other advisors and staff by maintaining their careers after you leave
  • your future family income by generating the payout you deserve for your hard work
  • your legacy as you see that your firm can stand on its own merit, with proper planning.

Let’s say you plan on retiring in 10 years. You could set up a smoother transition by identifying and training your eventual replacement now, making client introductions and working out the details of your future buyout.

If you haven’t identified a successor in your practice who is prepared to take over, you could acquire or partner with an advisor who has the right skill set and shares your values. Taking over another firm with an established book of business could provide the resources to fund your eventual exit. Buying a financial advisor book of business could further grow the value of your practice so you could sell for more on the open market later.

How to Find a Book of Business for Sale

Finding a financial advisor book of business for sale can be challenging. To narrow your search, you need to have a very specific idea of what you’re looking to take on: the type of advisor, the size of the book, the type of practice and so on.

Your existing network is often the best place to get started. Consider what local contacts you have from industry organizations, your charitable work and other interests, and personal friendships. Given that you already have an established relationship and trust, you have a sense of what working together would be like. You also save the time and money that would have been spent on marketing.

Besides your existing network, you could also find deal partners with advisors you don’t already know. Even if you have some warm leads in mind, you may want to make some additional outreach to see what other offers you could get as a backup.

In a seller’s market, upward of 40 buyers might exist for every firm looking to sell, although in reality, most interested buyers don’t have the resources or experience to complete a deal. Even so, there are still typically around five qualified buyers per quality seller. That’s why it’s crucial to have a plan to attract these limited opportunities. Some marketing strategies include:

  • Attending industry conferences and networking events to expand your network of warm advisor leads.
  • Hosting your own events for advisors on topics they’d be interested in, like sales strategies or regulatory changes. These events are a chance to build buzz around your firm and future deal.
  • Identifying local firms and reaching out through an ongoing marketing campaign using postcards, emails, letters, calls and social media.

Other lead sources

Another way to find potential deal partners is through external listing websites like FP Transitions¹, and AdvisorBid². They’re like Match.com for financial practices. Through these websites, advisors can connect with potential buyers and sellers.

If you are part of a large broker-dealer firm or network, your company may have its own internal listings for these same transactions to keep assets in-house. In this scenario, you generally have less control of the details and process.

Carson partner offices work with a dedicated and experienced mergers and acquisitions team who help you weigh your options and determine what’s best for your business. Our team helps our current partners identify potential external partners, as well as evaluate, structure, value and negotiate strategic transactions, with marketing support and deal framework assistance from our legal team.

Coaching and support

Given that this process can be time-consuming, you might want to bring on a coach for support. Carson has emails and other marketing materials ready to go for financial advisor M&A outreach, so you don’t have to spend time creating them all from scratch.

Your business coach can also make sure you understand the process of how to buy a financial advisor’s book of business and that you’re prepared for the transaction. It’s crucial that your firm is ready to complete the deal, both on the financing side and in terms of operational efficiency. If you buy a book of business while understaffed and lacking adequate resources, this could offset any advantages of the acquisition and even damage your practice, leading to lost clients and employee turnover.

Your coach can also help you understand what would make your practice most attractive to potential sellers, so you stand out in a tight market. Depending on where you are, this extra prep work could take several years but could add considerable value to your future deal.

Why Sell a Financial Advisor Book of Business?

Given the level of deal activity, other advisors and firms could be highly interested in buying your practice. While you typically need a book of over $30 million in assets to find a deal partner, we have seen local acquisitions for books in the $7 million to $12 million range. When it comes to selling a financial advisor book of business, here are the top reasons, and benefits, for doing so.

You’re getting ready to retire or leave the industry

M&A plays an important role for your succession planning. Both buying and selling practices are different routes for protecting your clients, staff, retirement and future legacy. This applies even if you’re leaving the industry, but not quite ready to retire. Selling could generate money for your next venture while transferring your clients to another trusted professional.

You want to add more resources to your firm

Selling could also make sense if you want to add more resources to your practice. By partnering with a larger firm, you could significantly expand what’s available to you and your clients.

Whether it’s better compliance, marketing, technology or financial planning support, a larger organization may simply be able to offer more than a solo practice or small firm.

For example, Carson’s Advanced Solutions team acts as an extension of our partners’ offices; this team is experienced in working exclusively with ultra high net worth clients who have complex planning needs.

You want to grow as a team versus on your own

Operating as a solo practitioner or with only a small staff limits what you can deliver. Not to mention, it can get a little lonely and stressful. By selling to another firm through M&A, you can combine resources and leverage each other’s strengths to drive future value.

You want to protect your clients with a continuity plan

You might not plan on leaving the industry for many years and even decades. But, as you likely advise clients, your should plan for unexpected illness, disability and death. By selling your practice to add additional team members, you create a continuity plan to take care of your clients and your firm should anything happen to you.

You’d like to improve your quality of life

Another reason to consider selling is if you’d like to improve your quality of life. Perhaps you built up your successful practice through years of working nights and weekends. By selling to another practice with more support, you may be able to maintain your current production levels – or even expand them – while creating a better work-life balance.

You want to maximize growth

One other attractive reason to sell is that you could maximize growth by playing to your strengths. For example, perhaps you’ve hit a ceiling at $300 million in AUM and dream of developing a billion-dollar practice one day. You might not have the capacity to grow due to too much time spent on marketing, operations and investment management. You could sell to a larger company that can handle this day-to-day work so you can focus on going out and meeting clients full time, which could help you reach this next level of growth.

How Do I Find a Buyer for My Business?

Before heading into the selling process, your first step should be to get a good idea of your firm’s valuation. That will set the tone for future negotiations. Go beyond simple rules of thumb like 1.5 to three times revenue and spend time thinking about the factors behind a firm’s value such as:

  • Average client age
  • Number of clients connected to the firm versus connected to you specifically
  • AUM per advisor, including AUM with advisors that will stay on after you leave
  • Growth trends
  • Technology and systems your firm uses

For an external calculation, FP Transitions method is an industry standard, with good reason³. Some firms might choose to work with an investment bank for the sale and they would help set the valuation. Of course, you can come up with whatever figure you want but, ultimately, the price you get will depend on the market.

Valuations are surprisingly high for wealth management firms as there is a high level of interest in the sector. For more information on calculating your company’s valuation, read our guide or speak with one of the valuation experts at Carson.

Finding buyers

When it comes to finding a buyer, the process is similar to that of looking for a seller. Start your search with existing connections from industry associations, local groups and charities and personal friendships. You save time by not having to market to strangers, plus you already have a sense of whether there is a culture or relationship fit. If you don’t have a local contact in mind or would like to further expand your search, other ways to find buyers include:

  • Attending industry conferences and networking events
  • Using matching websites like FP Transitions1 and AdvisorBid2 that connect buyers and sellers of firms
  • Contacting your broker-dealer or RIA to see if they could connect you to other internal advisors looking to buy
  • Partnering with Carson, which specializes in wealth management M&A, including making introductions to qualified buyers

Evaluating buyers

Due diligence goes both ways with M&A transactions. Both the buyer and seller should closely examine each other’s firms, and you should also closely consider your deal partner in ways beyond dollars and cents.

Of course, you want to focus on whether the terms of the deal make sense from a financial perspective, based on your valuation estimate. This includes making sure the buying firm has the resources to complete the deal and to properly manage your book.

Understand how the potential buyer would manage your practice after they take over. How do they operate and do they have enough staff to handle the needs of your clients? This is important for your legacy and retirement income, assuming part of the buyout is based on the firm’s future performance and client retention. If you will stay on with the firm, what will their expectations be for you?

Assess whether there is a cultural fit. Can you see yourself working together smoothly during the negotiations and beyond, or is there a personality mismatch with someone in the group? This is especially important if you and/or your staff will stay on after the deal.

These conversations can be easier when you have existing relationships with the buyer, but consider the culture fit with other advisors in the practice, too, even if it feels a bit awkward. Above all, both parties should walk away feeling comfortable and confident in the agreed deal.

M&A considerations and support

Once you complete a deal, it can be hard to reverse, which is why it’s crucial to handle the process properly. Ideally, both parties will have some sort of consultant or advisor with experience in M&A, whether it’s a business broker, an investment bank or a wealth management support specialist.

Your consultant can help you set the proper valuation, discuss the different ways to structure your deal and point out common pitfalls to avoid. These could include making sure the buyer doesn’t have any liability issues from a regulatory standpoint and that they offer all the products your clients currently use as investments.

With their experience, your advisor can also suggest questions you might not think to ask before completing a deal, like making sure both you and the buyer agree how long you will stay at the firm post-deal. One question to ask a potential buyer is whether they have gone through a merger or acquisition before. Many firms, especially smaller practices, only have the capacity to handle one or two deals properly. If they are trying to make multiple acquisitions, especially over a short period, they might be overextending their resources.

All of Carson’s partners have access to an experienced in-house M&A team. This is an advantage of finding a buyer through the Carson network: You’ll know that both sides of the transaction will be going in with the necessary support.

Preparing for a Successful M&A Deal

Whether you’re looking to buy or sell your practice, a few common tips can help make sure any future deal is a success:

  • Have a goal for buying and selling, so you can narrow your search to the best candidates
  • Understand your current valuation and how it will benefit from a deal
  • Use several forms of outreach to both existing contacts and advisors you don’t know yet
  • Make sure to have some sort of M&A support, whether it’s a broker, an investment bank or an industry specialist

Getting ready for a merger, acquisition or sale takes time. The sooner you start preparing, the sooner you’ll be ready to hit the market. Working with a qualified advisor can get you deal-ready and maximize your value. Carson’s M&A team has a proven track record of success with over 40 completed transactions. We can be your partner as you figure out this exciting next stage for your firm. For more information, schedule a call with our M&A team.


1) AdvisorBid, https://www.advisorbid.com. Accessed 28 June, 2022.

2) FP Transitions, https://www.fptransitions.com/. Accessed 28 June, 2022.

3) Kitces, Michael. “FP Transitions And The Kelley Blue Book Valuation Of An Advisory Firm.” Kitces.com, https://www.kitces.com/blog/fp-transitions-review-of-david-grau-comprehensive-valuation-report/. Accessed 28 June, 2022.

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