There’s a split screen in registered investment advisor M&A right now, and it should concern every advisory firm owner considering a transaction in the next two to five years.<\/p>\n
On one side: sellers. According to DeVoe & Company’s 2025 annual outlook<\/a>, 54% of RIA leaders expect M&A volume to increase over the next 12 months, and 59% expect firm valuations to remain steady or rise. Given what we saw in 2025\u2014466 wealth management merger deals at a 17.8% compound annual growth rate since 2020\u2014that optimism isn\u2019t unfounded.<\/p>\n On the other side: buyers. In a more recent DeVoe survey of more than 100 RIA executives<\/a>, 82% anticipate stable valuations, 18% expect declines and none expect increases\u2014signaling, for the first time in years, a potential ceiling for consolidators.<\/p>\n That gap between what sellers expect and what buyers are willing to pay is the most important dynamic in the market right now. And the firms that understand why the gap exists will be the ones that escape it.<\/p>\n Related:What Really Drives RIA Valuations: Business Mix, Organic Growth, and Deal Structure<\/a><\/p>\n The Valuation Plateau Is Real \u2014for Most Firms<\/p>\n Let\u2019s ground this in the numbers. 2026 RIA business valuation multiples range from 5x EBITDA for sub-$500 million assets under management lifestyle practices to 13x to 15x EBITDA for billion-dollar fee-only firms with documented organic growth and second-generation advisor benches. The 2025 median valuation hit 11.6x adjusted EBITDA\u2014a record high, up from 11.0x in 2024, 9.9x in 2023, and 8.0x in 2020.<\/p>\n So buyers aren\u2019t wrong that multiples have run hard. But they\u2019re also not paying the same multiple for every firm. The spread between a 5x deal and a 15x deal is enormous\u2014and it\u2019s not random.<\/p>\n The variable that separates a 5x firm from a 13x firm is not the AUM. It\u2019s the quality of the growth behind that AUM. Specifically, can a buyer model and project the future revenue? Or are they buying a business built on relationships they can\u2019t see, quantify or replicate?<\/p>\n What the Data Has Always Shown: The Valuation Premium Is Measurable<\/p>\n My brother Jeremi Karnell spent his career sitting at the intersection of advisor practice management and enterprise data. As CEO of Truelytics\u2014a practice management platform we built together and eventually sold to Envestnet\u2014and later as dead of data solutions at Envestnet, he had access to granular KPI data across thousands of RIA and enterprise advisory clients.<\/p>\n The pattern was consistent: firms that had systematized their client acquisition\u2014firms that weren\u2019t purely referral-dependent or buying leads from brokers\u2014showed dramatically better performance metrics across the board. Lower client concentration risk. Predictable revenue growth curves. Documented CAC and client lifetime value data that a buyer could actually underwrite.<\/p>\n Related:Deals & Moves: &Partners Recruits $1.6B in Advisor Teams<\/a><\/p>\n The Truelytics data made this concrete: firms with systematized, scalable, predictable organic growth commanded valuations approximately 200% higher than comparable firms that hadn\u2019t built that infrastructure. Same AUM range, same service model, same market. The differentiator was entirely the system behind the growth.<\/p>\n That number\u2014200%\u2014is not an outlier. It reflects a fundamental underwriting reality: buyers pay for certainty. Referral-based growth is opaque. Lead-broker growth is rented. Systematized organic growth is owned\u2014and ownable growth is financeable growth.<\/p>\n The Three Growth Models (And What Each One Is Worth in a Deal Room)<\/p>\n There are essentially three ways RIA firms grow organically. Each has a very different valuation profile:<\/p>\n 1. Referral-Driven Growth<\/p>\n The industry default. COI relationships, client referrals, professional networks. Important, but opaque. When your top referral source retires, the pipeline retires with them. You can\u2019t show a buyer a model. You can\u2019t forecast it. You can\u2019t replicate it in a new market. Sophisticated buyers are doing more deals and getting better at identifying which firms\u2019 growth will survive ownership transfer. Referral books are increasingly viewed as a relationship risk, not a growth asset.<\/p>\n Related:M&A Trends in Wealth Management: Growth, Valuations and Succession Planning<\/a><\/p>\n 2. Lead-Broker Growth (Rented Growth)<\/p>\n The rise of SmartAsset, Zoe and similar platforms has given advisors access to high-intent leads. But it comes at a cost most don\u2019t fully account for. Lead brokers acquire that traffic for roughly $55 to $75 per lead, then sell it back to advisors at $300 to $500 per lead\u2014and simultaneously sell it to five competitors. You\u2019re paying a 5 to 10x markup for a lead that your competitor just received two seconds before you. And when you stop paying, the leads stop coming. You own nothing. You\u2019ve learned nothing. The signal intelligence\u2014which channels work, which audiences convert, which messages land\u2014stays with the broker.<\/p>\n In a deal room, this shows up as customer acquisition cost that\u2019s high, variable and entirely dependent on a third party continuing to operate and prioritize your account. Buyers discount this. Sharply.<\/p>\n 3. Systematized Organic Growth (Owned Growth)<\/p>\n This is the model that commands premium multiples. Not because it\u2019s more expensive to build\u2014in 2026, with AI-native platforms, it\u2019s actually cheaper than the lead-broker alternative. But because it produces something a buyer can underwrite:<\/p>\n Documented CPL that the firm owns and controls<\/p>\n Audience data that compounds month over month<\/p>\n A growth system that improves with every campaign signal<\/p>\n A marketing infrastructure that transfers with the firm, not back to a vendor<\/p>\n RIAs with three-year organic growth above 10% (net of market) have tended to trade at a premium of roughly 1.0x to 1.5x to adjusted EBITDA relative to peers with organic growth below 3% (Advisor Growth Strategies\/DeVoe qualitative data). On a firm doing $3 million in EBITDA, that\u2019s $3 million to $4.5 million of additional enterprise value\u2014for the same business, just with a better documented growth engine.<\/p>\n Why Q3 Is the Window<\/p>\n One hundred twenty-five transactions were announced in the third quarter of 2025, tying the record set in the fourth quarter of 2024. Year-to-date through September, 345 transactions closed, a 44% increase over the same period in the prior year<\/a>. Deal activity peaks in Q3 and Q4 as advisors look to close before year-end. That\u2019s also when buyers do their most intensive quality screening.<\/p>\n The firms that enter the third quarter with a documented, systematized growth engine have leverage in a negotiation. The firms that enter with a referral book and a SmartAsset subscription are swimming in a pool where buyers are predicting a valuation flatline.<\/p>\n You cannot change your growth model in a quarter. But you can start building the infrastructure now\u2014and the right platform can compress what historically took years of expensive agency relationships into something operational in weeks.<\/p>\n What Buyers Are Actually Underwriting<\/p>\n I want to be direct about what sophisticated acquirers and private equity-backed platforms are looking for in 2026, because it\u2019s changed materially from five years ago.<\/p>\n