The deal that sets your RIA price is never signed

Advisor Growth Strategies has a message for RIA owners watching the 2025 M&A market: the deal that sets your price is the one you never sign. In the June issue of the Journal of Financial Planning, AGS partner Brandon Kawal argues that the transaction that matters most happens inside the firm, years before an outside buyer appears.

The market numbers support Kawal. Deal volume reached 276 transactions last year. Median valuations crossed 11.6 times adjusted EBITDA. Nearly 100 unique firms completed at least one acquisition. By any measure, that is a seller's market.

Kawal argues that the ownership structure built before any offer is what separates a premium outcome from an average one. He names the standard objections: the next generation hasn't earned equity, dilution isn't worth it, succession planning can wait. Each one, he says, costs more than it saves. 'Compensation keeps people. Equity commits them,' he writes.

The obvious pushback is that dilution compounds. A stake given today costs more at exit if the firm grows. Kawal turns that around. The equity is part of what makes the exit premium real, so handing it over is an investment in the multiple, not a deduction from it.

The hard part is timing. The commitment has to be made before the results justify it. An owner who gives equity today to a partner who hasn't yet produced top-line results is betting against the same doubts Kawal lists. In his telling, the doubt is the expense.

The practical effect is to shift the focus of succession planning. Owners usually treat the sale as the end, with an earn-out or a rollover as the last negotiation. AGS argues the sale is better treated as a starting point. The equity conversation is where the real deal gets struck.