The world of registered investment advisor (RIA) mergers and acquisitions (M&A) is currently experiencing a fascinating dichotomy. On one side, sellers are optimistic, with 54% of RIA leaders expecting M&A volume to increase and 59% expecting firm valuations to remain steady or rise. This optimism is not unfounded, given the 17.8% compound annual growth rate in wealth management merger deals since 2020. However, on the other side, buyers are more cautious, with 82% anticipating stable valuations and only 18% expecting declines. This discrepancy between sellers' expectations and buyers' willingness to pay is the most critical dynamic in the market right now, and it could spell trouble for advisory firms that don't understand why the gap exists.
The valuation gap is real, and it's not just a matter of multiples. While 2026 RIA business valuation multiples range from 5x EBITDA for sub-$500 million AUM lifestyle practices to 13x-15x EBITDA for billion-dollar fee-only firms with documented organic growth, the median valuation in 2025 hit a record high of 11.6x adjusted EBITDA. But the spread between a 5x deal and a 15x deal is not random; it's driven by the quality of growth behind the AUM.
My brother Jeremi Karnell, who spent his career at the intersection of advisor practice management and enterprise data, found that firms with systematized, scalable, and predictable organic growth commanded valuations approximately 200% higher than comparable firms without such infrastructure. This is because buyers pay for certainty, and systematized organic growth is owned and financeable, whereas referral-based growth is opaque and lead-broker growth is rented.
There are three primary growth models for RIA firms: referral-driven growth, lead-broker growth, and systematized organic growth. Each model has a different valuation profile. Referral-driven growth is important but opaque, and its value is tied to the relationships of the top referral source. Lead-broker growth is rented and comes with a high, variable customer acquisition cost (CAC) dependent on a third party. Systematized organic growth, on the other hand, produces a documented CPL that the firm owns and controls, audience data that compounds over time, and a growth system that improves with every campaign signal.
The third quarter is a critical window for RIA firms to build the infrastructure for systematized organic growth. This is when buyers do their most intensive quality screening, and firms with a documented growth engine have leverage in negotiations. However, buyers are looking for something more than just a growth model; they want to see if the growth is repeatable without the founder. This is where artificial intelligence-native platforms like VastAdvisor come in, enabling advisors to move from lead-broker dependency to owned organic growth infrastructure.
In my opinion, the single highest-leverage investment an RIA firm can make today is in documenting and systematizing its client acquisition. While buyers are predicting a valuation flatline, the firms with owned, data-backed, and systematized growth engines will find that buyers still compete aggressively for them, because they are increasingly rare. The spread between a 5x deal and a 13x deal is a growth system, and building it is the work of the third quarter. So, if you're considering a transaction in the next two to five years, start building your growth infrastructure now.
