Artificial intelligence is driving a wedge in the RIA M&A market.
Firms that have AI embedded into their operations are fetching premium multiples. Firms that haven’t are watching their valuations lag, even when their revenue looks strong.
This isn’t speculation about what might happen in five years. It’s about what buyers are willing to pay today.
In an industry consolidating rapidly, where client expectations are rising and margin pressure is real, operational maturity matters more than ever. Buyers want firms that can scale without hemorrhaging costs or collapsing under their own complexity. AI is a reliable signal of that capacity.
AI Signals Efficiency
This shift is evident in what acquirers ask about during due diligence. Assets under management and client count still matter, but they’re table stakes. Buyers focus on how heavily a firm relies on manual processes and how dependent it is on key personnel.
A firm that automates billing, compliance monitoring, portfolio rebalancing and reporting through AI-powered systems answers those questions before they’re asked. Its operations are transparent, its workflows documented, and it runs without heroic individual effort.
Buyers favor firms built to outlast their founders’ Rolodexes.
Buyers favor firms built to outlast their founders’ Rolodexes. Their clean tech stacks signal institutional discipline, lower integration risk, faster value capture and fewer post-deal surprises.
Firms running on spreadsheets and patched-together workflows face discounts, sometimes steep ones. The revenue might be there, but the infrastructure isn’t calibrated to sustain further growth.
It’s All About Integration
Margins show the real impact. Premium valuations typically go to firms operating at 35% margins or higher. AI helps firms reach that threshold by cutting manual work and freeing people for revenue-generating and client-facing roles. Clients benefit directly: faster responses, more personalized guidance and advisors with better data and more time to use it.
However, technology doesn’t automatically lead to higher valuations. Buyers distinguish between firms with intentional architecture and firms with cluttered assortments of software tools.
What matters is integration, documentation and flexibility. Do the systems talk to each other? Are processes clearly mapped? Can existing technology adapt to a new platform post-acquisition?
A well-designed system that integrates with acquirer infrastructure adds value. A mess of single-purpose apps, no matter how expensive, doesn’t.
Not Just Tech For Tech’s Sake
The difference shows up in daily operations. A firm with intentional architecture runs on integrated systems where data moves automatically. CRM software feeds portfolio management, which triggers client reporting and logs compliance activity without manual intervention. Advisors spend time advising rather than reconciling platforms or hunting for information.
The firm with fragmented tools might look organized on paper but operates poorly.
The firm with fragmented tools might look organized on paper but operates poorly. Advisors juggle multiple logins and manual data transfers. They maintain shadow spreadsheets because their tools don’t communicate. Compliance staff reconstruct audit trails from disconnected sources.
Both firms might spend the same on technology, but only one has built infrastructure a buyer can trust. The other is selling technical debt.
Upmarket Indicator
That gap becomes even more pronounced in certain deal types. In tuck-in acquisitions, where a buyer absorbs a smaller firm into an existing platform, the seller’s technology often gets stripped out. But in standalone deals, especially in the ultra-high net worth segment where operations are complex and clients demanding, technology becomes central to valuation.
Buyers paying 20 times EBITDA expect enterprise-grade systems, documented processes and operating models that reduce key-person risk. AI supports all three pillars of operational credibility: process discipline, scalability and risk mitigation.
The best implementations enhance advisor judgment rather than replacing it. AI can scan client communications for signs of concern or opportunity, prioritize outreach based on behavioral signals, flag compliance issues before they escalate or surface patterns in client data that would take hours to find manually.
It gives advisors leverage without displacing their role, making it easier to deliver on client expectations at scale.
In The Name Of Scale
So, while it makes sense that smaller firms sometimes balk at the upfront cost of AI, incremental moves can make positive differences without requiring a complete platform overhaul. Upgrading a CRM, automating client reporting or adding AI-based compliance alerts improves efficiency and reduces operational risk for RIAs of all sizes.
Every step toward operational independence raises valuation.
The key is ensuring each decision supports scalability and reduces reliance on any single person. Every step toward operational independence raises valuation.
AI is also reshaping how buyers perform due diligence. RIAs with organized data, clear documentation and integrated systems make it easier and faster for buyers to assess risk and value.
It’s A Must-Have
Firms that can demonstrate clean operations, reliable workflows and minimal key-person dependency are de-risked from the start. This transparency builds confidence — and confident buyers move faster and make better offers.
In a market that rewards margin, scale and discipline, AI has moved from optional to expected. Buyers assume well-run firms have invested in modern infrastructure. Firms that haven’t are paying a price for that gap.
Those investing in scalable, AI-enhanced operations aren’t just building better businesses. They’re turning operational strength into valuation upside.
Harris Baltch is Managing Director, Co-Head of Investment Banking at Dynasty Financial Partners.
