What will RIA consolidators look for in 2025


This year it is ready to create a number of changes within the property management industry – some indecisive, others with influential, mostly somewhere in the middle. For example, concerns throughout the industry, including the lack of demographic -led councilors and increased demand for advice coming from the major transfer of wealth, will create innovative solutions that provide scale personalization.

Many things will remain the same, as is the large role of private capital, continues to play within the RIA M&A space (within a strong macroeconomic ecosystem, it can exceed last year's impressive numbers). However, I predict a shift in the EP approach to make agreements. The nature of consolidation in our industry is changing.

The powerful M&A activity of 2024 was in accordance with my previous assertion that we are in the previous beginnings of a period of consolidation within the management of property. I believe this era will continue for the next decade. Existing buyers continue to build their market share, and new buyers are entering the space looking to make their mark and win big roi.

But next year, I believe that both groups of plaintiffs will depart from the “bigger is better” mantra that, for a long time, has informed the actions of our industry motions and jokes. Councilors seeking to sell, earn money or partner with buyers to take advantage of the profitable deals that are there (currently 8x, 10x, 12x times EBITDA or more) will discover that they need to bring more to the table other than size. Historical Growth – Market Network – will be how buyers evaluate the value of a firm.

Growth prospects promote interest in PE firms. In 2025, we are likely to see more selectivity, with strategic buyers increasingly interested in firms without proven story of new net growth, regardless of their current size. Many deals are in the game, but buyers are more judgmental before they open their wallets.

Set buyers will be more and more removed from the negotiation table without the right growth numbers. The youngest buyers in the market, those seeking to build their reputation, will tend to be more flexible and consider firms with slower growth. However, their offers may not be what sellers expect. While high -level firms will continue to look for and receive a premium, sellers with less than stellar growth rates and no strategic plan to return them may need to rethink their pricing expectations.

Advanced success belongs to those that grow the most and faster. The M&A historical model received a top-down approach, with buyers who invested in their new addition to boosting. The new trend is towards a balanced model that includes a top-down and bottom-up approach to growth.

If a firm with a large growth history buys a firm that already has an excellent growth record, is a “1+1 = 3” formula for synergy and scale. Sellers coming to the market with firms with a tendency to follow the growth record will grow faster within the buyer's business model. They offer not only assets, but advisers who can continue to grow business.

After all, something is worth what people are willing to pay … and buyers will not be so prone to setting a premium in size only. In other words, bigger is better only when growth is good.

Jeff Nash is the chief executive and co -founder of Bridgemark strategies.



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