JPTD consults on a $28m all-in-offer* for a $3.3m Hybrid RIA team
Practice Background
Our client is a branch manager who leads an office of more than 10 advisors with support staff. They are a hybrid RIA with 80% of its revenue being fee-based and 20% being from old insurance and annuity contracts. This was not an ensemble practice but a super OSJ meaning the advisors own their own practices. The branch manager had responsibility for compliance, operations, and recruiting. The group as a whole was growing at a rate of 10%+ CAGR over the past 3 years.
Client Objective
The client's goals are:
- Partner with a world-class firm that puts advisors and clients first
- Has a best-in-class tech stack to help take care of clients
- Find a way to monetize either a fractional or full M&A deal
- Support their growth plans over the next 10-15 years
Key Data
Top line revenue - $3.3m
EBITA - $1.4m
AUM - $750m
# of clients - 240
Average Client Age - 57
Product Mix: 93% fee-based, 7% B/D and annuities
All-In Offer* Highlights
- 100% acquisition
- Sell and stay model
- $7.5m cash upon signing
- $2.5m PE firm stock 100% vested in year 5
- $3m revenue retention payment at the end of year 1 (assuming 90% revenue retention)
- $5m in cash paid at the end of year 3 assuming a 20% CAGR on the top line
- Top line multiples - 5.45X on consideration and 8.48X on "all in" definition
- EBITA multiples - 12.85X on consideration and 20X based on the "all in" definition
- Ongoing payout rate of 30% 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.