You may not remember the 1992 movie “Glengarry Glen Ross,” but you’ve probably heard Alec Baldwin character’s admonishment to his sales team: “always be closing!” For today’s mid-sized and larger RIA firms, a better piece of advice is “always be acquiring!”

It makes good sense to keep your eyes and ears open so you can spot and pursue opportunities to grow your own business. David DeVoe, managing partner of DeVoe & Co., which tracks RIA mergers and acquisitions, recently remarked about the record number of deals in the industry – “It’s a new normal for increased activity and we expect the trajectory to increase over time,” he told InsuranceNewsNet.

Several factors are fueling the number of smaller RIA firms that are open to being acquired. Many longtime advisors are nearing or at retirement age, and they’re ready to exit. Others are weary of the uncertainty in government regulations or increasing compliance and licensing burdens that distract them from serving clients. Their desire to move out of the business creates excellent opportunities for firms that are eager to grow.

Those availabilities are some reasons why it’s wise for mid-sized and larger firms to stay open to the idea, but there are a number of other strategic reasons. One of the most impactful is the ability to spread many of your operating costs across more revenue. For example, you may be able to realize greater impact from your investment in marketing and use your larger size to increase your purchasing and negotiating strength. Or, you may be able to reduce the number of competitors in your marketplace.

If your current team takes over service of the acquired firm’s clientele, you’ll likely reap the benefit of additional revenue without having to add corresponding staff costs. Or, if the firm you’re acquiring has high-performing staff, you’ll be able to leverage their strengths and in turn increase the strength of your organization without going through the hassle of recruiting.

As a larger organization, you may gain additional value in the eyes of clients and prospects by being able to offer expanded services or expertise. The firm you acquire may have distribution channels or markets that will increase the reach of your organization and diversify your overall client base, helping you reduce business risk.

No matter what your goals, to react quickly to acquisition opportunities, you’ll need ready access to additional capital. That’s where a relationship with a lender who understands your market and can provide funding based upon the revenue streams you’ll add can be a powerful ally.

About Oak Street Funding

The materials in this paper are for informational purposes only.

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