Markets sent RIA assets surging. What that means for EBITDA multiples

With AUM totals hitting a record high, RIA owners eyeing an exit sale now have more leverage to demand higher prices from acquirers.

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And valuation experts say many are likely to get what they want, even if buyers know much of RIAs’ recent asset gains derive from a years-long bull run in equity markets. With stock indexes hitting record highs in recent weeks, new research shows RIA asset accumulation is continuing at a breakneck pace.

In its annual “industry snapshot” released Wednesday, the Investment Adviser Association reported that assets managed by investment advisors registered with the Securities and Exchange Commission rose by a whopping 22% year over year in 2025 to nearly $177 trillion. Separately, the data and research firm FINTRX reported this week that 438 independent RIAs saw their AUM totals surpass $500 million (271 firms) or $1 billion (167 firms) in the first quarter this year, more than tripling the total of 126 firms that crossed the same thresholds a year ago.

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Asset boosts from new or existing clients, or from the market?

With many RIAs allocating client assets to public securities, surging markets can give a false impression of business growth stemming from net new assets. Many firms, in fact, are simply riding economic momentum. 

Record-high AUM totals thus pose a fundamental question for RIA acquirers: How much of the growth stems from “organic sources” — assets from new and existing clients — and how much from market gains?

Peter Nesvold, the managing partner of the consultant and investment bank Nesvold Capital Partners, said RIA buyers are most attuned to organic growth rates when deciding what they’ll pay for a given firm. But despite acquirers’ best efforts to focus on assets from new and existing clients, Nesvold said there’s little doubt that market gains are bolstering sellers’ prices.

“It’s just the inflated size of some of these firms now, because the equity markets have been so strong for so long, the bias has been to higher valuations,” Nesvold said.

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Median EBITDA multiples on the rise for RIA sellers

Brandon Kawal, a partner at Advisor Growth Strategies, noted that RIA acquirers’ main means of valuing firms is to look at their EBITDA — earnings before interest, taxes, depreciation and amortization. Firms’ earnings are often directly tied to AUM, so there’s little doubt that market gains are driving up valuations.

“While organic growth net of market flows is a very good indication to a buyer of the health of a business — your ability to bring in new clients, your ability to retain clients — the aggregate pricing mechanism is adjusted EBITDA,” Kawal said. “And that is undeniably influenced by market returns.”

Purchase prices have indeed been on the rise. In its latest RIA Deal Room report, the IAA found that the median valuation placed on RIAs sold last year came to 11.6 times their EBITDA. That was up from a multiple of 11 in 2024.

Kawal confirmed offers can exceed 20 times EBITDA for some firms. But he characterized those as uncommon.

“You really need to have repeatable organic growth, access to different client segments, a really strong team and the ability to give a buyer access to a new organic-growth lever,” Kawal said. “If you don’t have that, then you’re probably going to be a little bit more like average.”

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For RIA buyers, acquisition prospects show no signs of drying up

One factor not contributing to rising valuations is any supply constraint among RIAs. The IAA’s industry snapshot noted that the number of SEC-registered advisory firms rose again in 2025, going up by 4% year over year to 16,544.

Karen Barr, the president and CEO of the IAA, said the high number of RIAs suggests competition for firms to buy isn’t leading acquirers to overpay. Yet not every purchase prospect is an equally appealing investment.

Barr said plenty of RIA owners run what she deemed “lifestyle practices. By and large, they’re content with what they have and aren’t devoting their energies to growth. 

That’s not what most acquirers want.

“They’re looking for firms that are fast growing, forward thinking,” Barr said. “They’re looking at future profits, they’re looking at innovation. There are plenty of fish in the sea, as it were, but they’re only looking for a specific species.”

Barr also noted that market gains most likely contributed to the increase in SEC-registered advisors last year. Under federal rules, investment advisors with more than $110 million in assets under management must register with the SEC. Rising markets likely pushed many firms over that threshold for the first time last year, Barr said.

“So some of these firms, they’re not really new,” she said. “They were just state-registered in the past.”

The IAA’s industry snapshot for 2025 meanwhile offered some evidence that the RIA industry’s growing AUM totals aren’t a result of strong market returns alone. Pulling data from the Form ADVs firms must file annually with the SEC, the IAA found that RIA client numbers were up by nearly 8% year over year to 73.7 million.

“Growing your number of clients, that’s due to your own success with your client referral network,” Barr said. “The markets can lift firms up. But being able to bring on board new clients and new net clients, even more importantly, that can be measured and assessed by acquirers.”

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RIA expansion at one end and consolidation at the other

Nesvold and Kawal both said the increasing number of registered RIAs runs contrary to the common perception that the industry is becoming more concentrated. 

Nesvold said the industry can better be represented by a barbell shape, with large firms at one end doing most of the purchasing and many smaller firms taking on assets and clients until they become potential acquisition targets. 

IAA’s latest industry snapshot report supports that perception. It found that nearly three-quarters of all assets managed by RIAs were in the hands of firms with at least $100 billion in AUM. Meanwhile, just over 87% of all RIAs managed $5 billion or less.

Nesvold said RIA owners coming into the industry most likely aren’t starting with an intention of eventually joining a large acquirer. Many instead arrive at that option only after finding there are limits to how far they can grow on their own or deciding they want money from their business to pay for retirement.

“I think not a lot of people start a business with the intent of selling it in X number of years,” Nesvold said. “But I think, just given how pronounced M&A has become in our industry, it’s a viable outcome for almost anyone.”

Kawal meanwhile said he thinks rising markets don’t just allow RIA sellers to command higher prices. Strong investment returns also enable acquirers to obtain more capital from financial backers, meaning they can offer more.

“I think what we’re seeing out there is that people are probably a little bit more aggressive, a little bit more active as a buyer, and a little bit more comfortable executing on a more aggressive M&A plan or investments in the business when the markets have been pretty supportive,” he said.