Sanchez's real multiple sits in the terms nobody published

Modern Wealth Management announced on Sept. 10 that it will acquire Sanchez Wealth Management Group, a practice with $710 million in client assets, and the founder will stay with the business after the sale. The asset figure is the one that will travel with the transaction wherever it is mentioned; the founder's decision to stay is the one that determines what Modern Wealth actually pays.

PWD's deal log records the transaction as announced on Sept. 10, sized at $710 million in assets under management, but the announcement carries no consideration, no contingent portion, and no retention terms attached to the founder's continued involvement. A multiple cannot be stated without a price and the assets it bought, and this deal supplies the second half of that pair and withholds the first.

Read the $710 million for what it measures: a client base as of a point in time, before anyone has been asked to stay, and between an announced deal and its closing a book can shrink. A few households decide they preferred the old arrangement, an account or two follows an advisor out the door, and the number that anchored the release becomes a due-diligence exhibit. That exposure exists in every sale of a practice, and it is larger when the relationships being sold belong to one person.

Where the principal stays, the buyer is buying two things with one signature: the book—accounts, households, the recurring revenue they produce—and the founder's remaining working life, the years of meetings and calls that hold the relationships in place while they are formally moved. The first is priced from today's assets; the second is priced from the contingency schedule, and the two pull against each other, because the richer the headline number, the more protection the buyer wants on it and the more of the consideration slides into the years after closing.

The questions that count about this deal are structural: what share of the purchase price is contingent on assets retained after the founder's transition, contingent for how long, and measured from which date—the close or the end of the client transition—tested on assets that remain at Modern Wealth or on the revenue the practice bills. Those are not academic distinctions; a seller can take a smaller headline number with a short, loosely drawn contingency and finish ahead of a seller who wins the larger number and signs a long earn-out tied to every household staying put.

The founder's retention is itself a term, and it runs in both directions: for the acquirer, a founder who stays is a hedge, because the relationships move at a human pace and someone who knows each client is present when a household calls with a question. For the seller, agreeing to stay is a second deal layered onto the first, payment for the book plus payment for the seller's time and continued production, with the second piece exposed to forfeiture if the assets leave. A seller should insist on knowing which dollars are for the book and which are for the calendar, because the two are measured and forfeited on different terms.

Underneath the retention language sits a harder question: if the consideration is contingent on assets that stay, part of the price is a wager on the founder's future production, which means the buyer has taken a position in the seller's remaining career, and that position should be priced as one. A founder who agrees to stay through an earn-out window and accepts a schedule that forgives nothing has sold a claim on his own working life at whatever discount the contingency embeds, and that discount is invisible to anyone reading the asset total.

The mechanics are where sellers lose ground, and they are settled long before the purchase agreement is drafted. Define retention at the household level rather than the account level, and value it on a stated date so both sides are measuring the same thing; test it against assets rather than revenue if the buyer sets the fees, since a revenue test lets the acquirer's own pricing decisions move the seller's payout; start the clock when the founder has finished moving clients rather than on the day the deal closes, because a transition year folded inside an earn-out window quietly shortens the period the seller is actually paid for. Then answer the ugly questions before signing: what happens if the founder leaves early, is pushed aside, or dies, and does the buyer's obligation continue when the seller's control over the outcome has ended?

Most announcements invert the hierarchy: for a founder-led practice, the contingency schedule is the multiple, and the asset figure is only its denominator. A seller who treats $710 million as the headline and the earn-out as boilerplate has the relationship backwards. The buyer is not paying for assets it can count today; it is paying for the assets it expects to still be there after the transition, and it will put unconditional cash behind that expectation only up to the limit of what it can recover if the founder's clients change their minds.