JPTD consults on a $24.6mm all-in-offer* for a $3.04mm Hybrid RIA team
Practice Background
Our client is single advisor practice that leads an office of 3 financial advisors with 2 support staff. They are a hybrid RIA with 80% of its revenue being fee-based and 20% being from insurance, annuity, or commission-related products. This was not an ensemble practice but an advisor that had bought several practices and brought on junior advisors. The advisor ran at a 15% CAGR rate in the practice and had a good brand name in their local smaller city.
Client Objective
The client's goals are:
- Partner with a high-growth firm whose stock could accelerate faster than the stock of the advisor's practice.
- Get a dividend-paying stock to replace some of the yearly advisor income.
- De-risk in a monetization strategy that would be a good balance of cash and stock.
- Support their growth plans over the next 10-15 years
Key Data
Top line revenue - $3.042m
EBITA - $1.786m
AUM - $325m
# of clients - 400
Average Client Age - 48
Product Mix: 80% fee-based, 20% b/d and annuities
All-In Offer* Highlights
- 100% acquisition
- Sell and stay model (ongoing payouts on both legacy and new clients)
- $8,149 m cash upon signing
- $1.5m PE firm stock upon signing - immediately dividend paying
- $6,432m revenue retention payment at the end of year 1 (assuming 90% revenue retention)
- $3.735m in cash paid at the end of year 2 assuming a 20% CAGR on the top line
- Top line multiples - 6.5x on consideration and 8.15X on "all in" definition
- EBITA multiples - 11.5x on consideration and 15X based on the "all in" definition
- Ongoing payout rate of 22% on legacy business and 37% on all new business with no expenses (W2 model)
*An All In Offer includes any money paid upfront, signing bonus, salary and potential earn-outs based on growth. It does not include retirement or overrides on production. Assumes you hit all required transition, retention and growth expectations.