RIAs are being bought and sold today at unprecedented levels. The first half of 2025 saw 148 transactions, an all-time high for the six month period, according to DeVoe & Company. The average assets under management (AUM) per seller jumped 30% since 2022, surpassing $1 billion.
Behind the numbers, it’s easy to forget that M&A is a complicated, multi-faceted process for both sellers and buyers. Legal issues abound in this process, including tax implications, regulatory matters, potentially litigious parties and forging terms of the deal that go far beyond financial matters.
To navigate these matters, it’s crucial for sellers and buyers to obtain capable legal counsel months before cutting a deal.
Key Legal Issues
A focus solely on numbers can lead sellers and buyers astray. A high payment may indicate terms in favor of the buyer, and vice versa. And legal counsel is there to ensure the contractual terms work for their clients.
“There are four key issues for parties to a financial practice M&A transaction,” said Scott Matasar, Senior Partner and Member at Matasar Jacobs. “First, defining exactly what assets are being sold and what are excluded. Second, a clear payment formula and sufficient guarantees of performance by seller. Third, clarifying who is responsible for defending and paying for legal claims that are made after the deal closes. Fourth, effective post-sale restrictive covenants on seller to protect buyer’s interests.”
Andrew Melnick, Partner at Davis Wright Tremaine, also believes lawyers must focus on regulatory compliance, privacy and cybersecurity, tax structuring and reputational diligence.
“Early planning on these fronts reduces deal risk and smooths post-close integration,” Melnick said.
The Earlier, The Better
Experts say sellers and buyers should contact counsel several months before closing a transaction to prevent any post-deal complications.
“The earlier counsel is engaged the better, but ideally 4-6 months before the parties want the deal to close,” Matasar said. “There are many legal issues financial advisors aren’t aware of, but qualified counsel will address to prepare a quality contract that addresses the most common issues and pitfalls.”
“We prefer to get involved while parties are negotiating the term sheet to make sure all material legal issues are raised and to ensure there are no surprises during the negotiation of the definitive agreements,” said Craig Sklar, Partner and Co-Leader of the Wealth Management Team at Seward & Kissel. “We have worked on many deals in the industry and believe we can add value regarding market terms and intelligence on potential counterparties.”
Legal Role Post-Closing
In an M&A transaction, the lawyers remain in the picture after the closing, sometimes actively, and always waiting to help out if any complications arise.
Sklar said his team assists with “governmental filings, obtaining counterparty consents or assignments, and reviewing post-closing purchase price adjustments or earnout calculations. We also maintain a calendar of important post-closing obligations to ensure the client is aware of the timelines and to avoid breaching the agreements.”
Melnick provides a similar list of items for which the attorneys remain engaged: “Post-close, counsel may oversee regulatory filings/transfers, assist with post-closing adjustments and indemnity claims, advise on employee transitions and non-competes, support client transition, and potentially help remediate any issues uncovered during diligence to ensure a smooth operational integration.”
According to Matasar, “Ideally, legal counsel are minimally involved after the deal closes. However, continued involvement of the deal lawyers is very important if disputes arise over payment, allegations of breach of non-solicitation provisions, or other issues over the parties’ contract obligations. Effective counsel can resolve these disputes informally before they escalate into litigation.”
Finding The Right Lawyers
Like many professions, attorneys are highly specialized with varied experience. It’s important to find the right counsel for a wealth management M&A transaction.
“Buyers and sellers should look for attorneys with RIA/wealth-management M&A experience, strong regulatory, tax and employment expertise, proven negotiation and drafting skills, and a track record on client-transition strategy and post-close integration, along with experience with post-deal litigation issues,” Melnick said. “Practical experience with cybersecurity/privacy issues is a plus.”
Aside from the right technical skills and expertise, lawyers and clients should connect on a deeper level, according to Sklar: “Your legal counsel is your partner so you need to feel there is a personality fit and that they will be responsive, protect your interests, be practical and solution oriented.”
Matasar points out that if the transaction involves an equity sale instead of an asset purchase, “hiring counsel experienced with negotiating such transactions, ideally in the state where the deal is located, is critical.”
On A Small Firm Budget
Melnick said that buyers and sellers with limited budgets should seek counsel that can manage the highest risk issues, including regulatory, client contracts, tax and data/privacy issues. They should also have in-house lawyers handle some of the work, which will free outside counsel to focus on the more important aspects of the deal.
“Consider handling certain diligence and transition workstreams internally where possible, to ensure that legal resources are deployed most efficiently on deal-critical issues like structure, risk allocations and legal documentation,” he said.
Matasar warned that important deals require the best counsel, even for smaller firms.
“Frankly, this is not the time to cut corners,” Matasar said. “If you are preparing to spend (or receive) six or seven figures in a practice sale, skimping to hire the lowest cost lawyer is unwise. Invest in quality counsel who can negotiate to ensure you get what you are expecting, and are protected from post-sale risks.”
Larry Roth is CEO of Wealth Solutions Report and Founder and Managing Partner of Ascentix Partners.
