News, Vision & Voice for the Advisory Community


How, strangely, money gets downplayed in RIA deal making and why it helps explain an anemic flow

Culture, fit, philosophy and a firm handshake are all swell, but without a financial bettering of the parties' interests, a deal rarely progresses

Author Guest Columnist John Furey May 10, 2013 at 3:49 AM
1 Comment
no description available
John Furey: Most deals get stuck when a proposed transaction is accretive for only one party.

John Furey

Elmer Rich III

Elmer Rich III

June 17, 2013 — 4:37 PM

Just found this article and another good job. Let us share some of our experiences:

- “Investing is really about swapping liquidity preferences.” This seems the same in M&A work.

- The maximum, medium-term, value for both parties is likely in 3-5 years. 10 years is also a realistic bench mark period but that is difficult to tolerate for most. Although with longer life-spans taking a 10 year “put-option” on the merger by the seller may be prudent.

- Practically, then, both parties have the same incentives to maximize the top and bottom lines over 3-5 years and share the results.

Let’s also remember that, in most cases, buyers aren’t putting any of their own capital at risk since the revenues of the acquired firms are used to pay for the deal.

There is also good research that acquisitions are more economical than organic growth.

However, the meltdown destroyed valuations and unrealistically lowered buyers expectations. These psychological trends take a long time to moderate. Most buyers want to pay ’07 multiples which provides no incentive for sellers. We do valuations for sellers and find them much higher than expectations.

If buyers want to spend their own capital for organic growth that’s typical, but the numbers don’t support it when acquisitions are available.

Related Moves

September 21, 2023 at 1:53 AM

Mentioned in this article:

Advisor Growth Strategies, LLC
Consulting Firm
Top Executive: John Furey

RIABiz Directory

The Industry Sourcebook for RIAs

   |    LISTING

RIABiz Directory sponsored by:

Directory Sponsor Logo

White Paper Postings

Common Tags

Recent Articles

Popular Writers

RIABiz logo


About Us




RIABiz, Mill Valley, California
Copyright © 2009-2024 RIABiz Inc. All rights reserved.