Pursuing minority stakes investments has become a frequent strategy in the independent wealth management M&A space for growth-oriented buyers and sellers.
This year, such deals began to pick up steam in February, when Rise Growth Partners announced a minority stake in $5.7 billion Grimes & Company. In May, Raymond James announced that it would offer advisors growth financing in return for minority stakes in their businesses. Constellation Wealth Capital (CWC) announced minority investments in $8 billion Procyon Partners in April, and in $20 billion Merit Financial Advisors in July. In June, $12 billion Concurrent Investment Advisors launched its own minority investment venture for RIAs.
According to Fidelity’s wealth management M&A transaction reports, 13 minority-stake investments were tallied in the first quarter of 2025, and seven minority investment deals were announced in July alone. According to Echelon’s RIA M&A Deal Report, between Q1 and Q2 2025, the average assets per minority investment deal increased from $2.5 billion to $9.2 billion, with private equity playing a significant role in the first half of the year.
These deal types can involve different considerations than change-of-control transactions such as majority stake investments or total acquisitions. (For more on the leaders in industry dealmaking, see WSR’s 2025 coverage of the M&A 5: Top Wealth Management M&A Professionals.)
In order to understand the prevailing nuances and factors relevant to minority stakes investments in the current market landscape, WSR gathered insights from Stan Gregor, Chairman and CEO of Summit Financial Holdings; Jeff Nash, CEO and Co-Founder of Bridgemark Strategies; Louis Diamond, CEO of Diamond Consultants; and David Reynolds, a Principal at Berkshire Global Advisors.
Deal Type Features
“Before any sale, who you partner with matters,” says Gregor, whose firm has made minority investments this year. “While a minority stake means you keep control and continue to run your business, the best partnerships are those where the investor brings their playbook and connections, and both sides grow together. It’s a partnership, not a takeover.”
For Diamond, the features of a typical minority stakes investment include a 10% to 49% permanent or long-term investment, no or limited forced sale rights, and flexible structures. Sellers maintain full control over operating their practice while accessing growth capital, M&A funding or liquidity. Buyers often secure board representation, protective rights and economic participation, aligning with growth without dictating day-to-day decisions.
Reynolds finds that these deals are generally structured as common equity, preferred equity or revenue shares. Investors’ minority protections target their cash flow, such as limitations or approval rights on items like compensation, taking on debt, M&A transactions and major deviations from an approved budget. With revenue share investors, the protections are typically more limited. Many minority stakes investors have long hold periods of over 10 years, if not permanent, he adds.
According to Nash, minority investors seek firms with sustainable and proven models, strong teams without “key-man risk,” and consistent net new asset growth. They prefer financial planning-centric, fee-based practices. Since such investors will not control decisions, they target firms with a track record of growth that is likely to expand further with added capital.
Minority Stake Incentives
The incentives for pursuing minority stakes investments instead of change-of-control transactions depends on which side of the deal you are on. Although capital infused into a business can be used to buy out certain retiring partners, buyers tend to do so selectively to ensure that retiring advisors do not hamper the firms’ business model or growth rate.
“Sellers seek minority investors to preserve their own successful business model,” Nash says. “Firms buying 100% typically homogenize acquisitions, which often comes with reshaping advisors and client interactions. Owners wishing to maintain their unique support structure and client approach may find a minority investor the better fit.”
Gregor notes that these types of deals appeal to sellers who value preserving legacy and maintaining company culture, as such sellers prioritize long-term collaboration over immediate full divestiture. As he sees it, minority stakes buyers care about influence, not interference.
In Diamond’s view, minority buyers target firms with strong leadership, recurring revenue and scalable platforms where they can align on vision and realize opportunities for future M&A. Buyers also prioritize firms with strong Next Gen talent and/or a leadership team with a long runway to continue operating the business.
Strategic Considerations
“Minority-focused investors gain access to elite firms, diversify across partnerships and build long-term equity value,” Diamond says. He sees a few aspects to the strategy behind the model, for which various firms have arisen that primarily or only make minority stakes investments.
“It’s a lower-risk, relationship-driven way to deploy capital in a consolidating industry while creating optionality for future majority acquisitions. Many minority investors also look to roll their minority stakes together to create a larger exit.”
For Gregor, it’s also about the balance of sharing risk, nabbing diversity and letting founders keep driving. Success comes from guiding instead of steering, having power without control, and being partners for the long play rather than flipping businesses, he argues.
However, Nash warns that since the wealth management industry is still rapidly consolidating, with new firms emerging daily, the business models of firms active in M&A will vary. So although many will be successful, only hindsight will reveal which approaches work best.
As Reynolds sees it, the strategy comes down to minority investors taking advantage of strong tailwinds in the wealth management space to generate stable and growing yields. They generally have significant sector expertise and can help their portfolio companies with operational best practices, M&A and other strategic initiatives in addition to providing capital to help with equity succession and/or growth.
Small Business Owners
Weighing the pros and cons of a minority investment can be daunting for small business owners. Gregor insists that they know their non-negotiables — specifically control, culture and vision. It’s also prudent to ask tough questions about alignment, governance and how hands-on the new partner plans to be. Making sure it feels like support and not surveillance is essential, he suggests.
Nash’s work includes advising small business owners who are considering minority sales. When mishandled, a minority sale can add complexity without solving broader needs beyond financing — such as operational and technology solutions, he warns. That’s why consulting an expert can help assess options, avoid pitfalls and save significant time and money, according to Nash.
Diamond concurs. He encourages small business owners to assess their goals, whether that is growth capital, partial liquidity or a strategic partner. Minority investments preserve control and upside but require sharing economics and governance. Therefore, before closing the deal, sellers ought to get alignment on values, time horizon before exit and rights granted. It’s also worth evaluating if the partner brings firm-specific relevant resources, such as recruiting support, Diamond adds.
“It is critical to understand your motivations, objectives, capital need and partnership criteria prior to having conversations with potential investors,” Reynolds says. “Minority partner firms generally have set investment models and structures that may or may not work for you depending on your objectives and criteria, so understanding what works and what doesn’t will help narrow the list of potential partners and make the process more efficient.”
Chris Latham, Contributing Editor, Strategic Advisor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com.
