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$3.04m Hybrid RIA Team Brings In $24.6M All In Offer

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.

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

Client Objective

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

Key Data

  • 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)

All-In Offer* Highlights

*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.

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