RIA buyers have more capital than ever; holding period now wins deals

Financial Planning's eight-item menu of financing options for RIA acquirers starts with the private equity firms that now dominate the buyer side and the RIA aggregators those sponsors back, runs through the banks that have always lent against a book of business, and ends with something newer: facilities from private credit firms. For a practice owner weighing a first or fifth acquisition, that wider field of willing funders beats the market most of them grew up in, where a deal lived or died on a single credit line and the owner's own balance sheet.

Advisor Growth Strategies partner Brandon Kawal's advice in that piece is about sequence: an owner considering a transaction that folds the practice into a new parent firm should start with the buyer's return model and test whether it matches the owner's own strategic objectives, rather than starting from whichever lender happens to be at the table. His warning is that the arrangement tends to fail when the capital arrives first and the reason gets reverse-engineered afterward.

Kawal calls the deeper market for deal capital a good sign, since the opportunity in wealth management is real, but also a generator of questions and confusion for the everyday operator, because the supply behind it is not hard to find: a third of advisors sit inside a decade of retirement, most without a written succession plan, and that is the supply every lender on the menu is trying to finance. One distinction the eight-item framing can bury is that a full change of control is only one category of the options available, which makes the list a map of how much control an owner spends rather than a set of exits.

The menu is also harder to shop than it looks, because most practices weighing a purchase do not carry a corporate development team, and the same capital sources competing for their firm are often the ones that will be signing their employment agreements; sorting permanent from finite capital inside a term sheet is not an operator's native skill. Kawal's answer is to make the why explicit before anyone prices it.

The clearest working example of that choice sits in Richmond, Virginia, where Wealthcare has been buying advisory practices against the balance sheet of an insurance parent; Sammons Financial Group acquired Wealthcare last year. Matt Regan, Wealthcare's president, describes the prior owner — private equity firm NewSpring Capital's NewSpring Holdings — as supportive through the firm's expansion from roughly $1 billion in client assets to $9 billion.

What Sammons brought is described as permanent capital: the coverage characterizes Sammons as a nearly century-old company that has never sold a business, and Regan credits that durability with lifting Wealthcare's deal activity since the acquisition. He says the pitch that a firm Wealthcare buys is a firm it keeps separates it from other buyers when it is recruiting sellers, and Wealthcare has since reached $10.5 billion in assets, with $1.5 billion of that held in the nine advisory practices it owns — roughly $167 million per practice, tuck-ins bought one at a time rather than a single large platform.

Sammons, a major annuity and insurance company, has spent the past five years diversifying its holdings with the purchases of Wealthcare, turnkey asset management and technology firm Beacon Capital Management, and fee-only RIA NorthRock Partners. Beacon runs $1.3 billion in regulatory assets with 39 employees per WAD's records, a small line against an insurer's balance sheet and a fair gauge of how early the non-annuity build still is; Regan's description of the strategy is that Sammons made a conscious decision to hedge its interest-rate exposure.

The tempting reading is that permanent capital beat private equity at Wealthcare's own table, but the record says otherwise: Regan's account of the NewSpring years is warm, and the platform Sammons bought was assembled with sponsor money. What changed is the horizon Wealthcare can promise a seller — that the answer to who owns this firm in five years is the same name — and that promise is now doing sales work a fee schedule cannot.

It matters to the owner on the other side of the table, because the record 11.6x median multiple Advisor Growth Strategies reported this summer is really a retention premium: the owners who moved equity to the next generation early collected the most at exit. The same logic runs through the buy side, where the buyer's return model fixes the horizon, the horizon decides whether the people who hold the client relationships stay, and the staying is what the seller is really selling.

Kawal's sequence, applied, is unglamorous: write down what the next ten years are supposed to look like, then price each item on the menu against that and let the financing follow. Wealthcare's recent run suggests the permanence pitch is winning sellers a higher bid alone would not, which is an uncomfortable position for any acquirer whose opening line is the multiple. The next platform Wealthcare buys is the cleanest test of whether the horizon keeps beating the price.