{"id":753658,"date":"2023-05-02T10:02:50","date_gmt":"2023-05-02T14:02:50","guid":{"rendered":"https:\/\/www.marketnewsdesk.com\/index.php\/advisor-growth-strategies-study-reveals-top-factors-driving-ma-market-firm-valuations\/"},"modified":"2023-05-02T10:02:50","modified_gmt":"2023-05-02T14:02:50","slug":"advisor-growth-strategies-study-reveals-top-factors-driving-ma-market-firm-valuations","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/advisor-growth-strategies-study-reveals-top-factors-driving-ma-market-firm-valuations\/","title":{"rendered":"Advisor Growth Strategies Study Reveals Top Factors Driving M&A Market, Firm Valuations"},"content":{"rendered":"

\nAffiliation model, compliance structure not found to have material impact on most independent firm valuations
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CHARLOTTE, N.C., May 02, 2023 (GLOBE NEWSWIRE) — LPL Financial LLC<\/u><\/a> (Nasdaq: LPLA) (\u201cLPL Financial\u201d or \u201cLPL\u201d), today announced the release of a study conducted by Advisor Growth Strategies (AGS), sponsored by LPL, describing key issues impacting today\u2019s wealth management M&A market and their effect on firm valuations. \u201cMaximizing Independence: Valuation Myths and Realities\u201d<\/u><\/a> can help independent advisors understand what valuation metrics matter and how they can leverage market intelligence to increase firm value as they grow their practice.<\/p>\n

To inform what is driving fair market value for independent advisors, AGS tested valuations between RIAs and independent practices leveraging a shared ADV on a Corporate RIA. Through this research, AGS found that affiliation model \u2014 whether through an independent RIA, a shared ADV corporate RIA model, or other wealth management firm \u2014 has little impact on business valuation for most firms.<\/p>\n

Marc Cohen, executive vice president of Strategic Programs at LPL, said this dispels the long-standing myth that advisors must operate independent RIA firms to maximize the enterprise value of their business. \u201cToday\u2019s M&A market favors growth, efficiency and talent over whether an independent firm does \u2018everything in-house\u2019 or outsources certain functions such as compliance and risk management to a platform provider,\u201d he said. \u201cAs the industry has matured, we have learned more about what drives value based on the significant number of transactions that have been completed in recent years. Advisor Growth Strategies\u2019 findings in this study provide a strong roadmap to independent advisors seeking to maximize their value, including a compelling argument to increase their utilization of outsourced providers for non-core functions to allow them to direct their own efforts directly at growth.\u201d<\/p>\n

The study evaluates the largest factors impacting firm valuation, defining these as \u201ctrue drivers of value\u201d:<\/p>\n