Maybe you’ve already given some thought to selling your RIA business. Maybe not. Many owners consider selling when they begin to feel burned out by the stress of running a business and are ready for new opportunities or retirement. But, even if you remain excited about the challenges and potential of your advisory business—and passionate about helping your clients—there may be good reasons to sell.
When United Capital was acquired by Goldman Sachs, our leadership, staff, and advisors in offices around the country saw it as an exhilarating step forward in our growth as a company. It was a new opportunity to help our clients and Goldman Sachs’ clients Live RichlySM.
So, if you don’t think you have a reason to sell, here are some to consider:
Running a small advisory firm comes with challenges. Selling all or part of your business may give you access to additional working capital—from processes that can help you run your business more efficiently to additional intellectual capital and broader distribution channels.
Now that United Capital has joined Goldman Sachs, our FinLife® CX advisor-led, tech-enabled platform will complement the digitally empowered consumer platform from Marcus by Goldman Sachs to provide an even broader range of individual wealth management services.
If your RIA isn’t growing right now, you’re not alone. It’s difficult to grow an established firm once it reaches capacity. And, according to InvestmentNews, the average advisor who’s reached capacity may be losing 5–6% of their assets every year, even if the bull market is hiding the loss.
There are good reasons why growth is difficult at this stage. You may lack the time to go out and drum up new business. Many advisors’ best customers, the baby boomers, are retiring now and using up their money or passing away. It takes time and money to go after new markets. An influx of new capital or new clients could break the stalemate.
There is always risk in a business. The smaller the business, the more vulnerable it may be to an economic downturn, market fluctuations, loss of a major client, or loss of a key employee or partner. Joining a larger organization may not protect completely against these risks, but it can reduce the impact.
The longer you hold on to a business you’ve built, the more risk you run that a downturn or catastrophe will lower its value and create a personal loss for you. Your business is likely one of your biggest assets, but you can’t realize any of that value until you sell all or part of it. If your business is doing well, this may be the time to capture that value and invest it in something more secure.
It’s a seller’s market for RIAs right now. Advisory firms are selling at much better prices than several years ago and owners are receiving excellent terms. Potential buyers for your firm today may include other advisors or private equity money, which is also fiercely competing for investments in the advisory space.
This may be an excellent time for you to partner with Goldman PFM through an acquisition, joining one of our offices, or remaining independent. As always, it will be our goal to help you unlock success for yourself and your clients. We have the technology, process discipline, and backing of a leading global investment firm to help deliver a more engaging client experience and run your business more effectively.
For financial professional use only.
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