Industry estimates a substantial share of RIA assets under management (AUM) are now backed by private equity (PE), reflecting the accelerating pace of consolidation. Could the continued M&A activity be due to scale, efficiency, technology or perhaps the founders seeking an exit path?
RIAs usually offer sticky revenue through recurring advisory fees, high margins with minimal capital outlay, client relationships that can span decades and an aging advisor demographic creating succession needs. PE sees opportunity in this fragmentation. By consolidating dozens of RIA firms into larger platforms, PE firms aim to create scalable, tech-savvy and eventually salable businesses, either directly or through backing a consolidator.
PE-backed firms often promise centralized compliance and back-office systems; shared investment platforms and research; marketing and branding resources; and liquidity events for retiring advisors. PE firms are increasingly targeting RIAs with under $1 billion in AUM. Eighty-one such firms were PE-owned in July 2025, up from 62 in 2024. PE-backed RIAs posted a three-year CAGR of 30.7%, compared to just 13.9% for firms without PE backing.
PE firms are also betting on scalable regional platforms that can be rolled up into larger national strategies. The shift from mega-aggregators to boutique roll-ups is creating new opportunities — and risks — for founders and operators. For someone who models revenue impacts and evaluates leadership dynamics, this trend could be a goldmine. It reshapes competitive positioning, alters client yield strategies and introduces new layers of organizational complexity.
For someone who models revenue impacts and evaluates leadership dynamics, this trend could be a goldmine.
PE firms continue eyeing future investments in our industry, navigating the current landscape shaped by macroeconomic shifts, evolving client expectations and digital transformation.
Key Considerations For PE Firms
There are several key considerations that influence the strategy of most PE firms:
The fragmented nature of the RIA and independent broker-dealer space continues to attract PE interest. Roll-up strategies remain viable, especially when targeting firms with strong client retention, scalable operations and succession planning gaps.
PE firms are prioritizing platforms that leverage AI, automation and data analytics to enhance advisor productivity, client engagement and compliance. Firms that are integrating CRM, portfolio management and digital onboarding tools are prime targets.
As fee pressure continues to mount, firms with diversified revenue streams — such as insurance, lending or alternative investments — are more attractive. PE investors are evaluating how firms can cross-sell and deepen wallet share. Firms that cater to Next Gen investors, women and underserved segments are gaining traction. PE is looking for scalable personalization — think behavioral finance tools, ESG integration and hybrid advice models.
Average holding periods have been stretched. PE firms are reassessing exit strategies, including secondaries, GP stakes and evergreen fund structures. PE diligence now emphasizes operational levers — cost-to-income ratios, advisor productivity and tech stack efficiency. Firms with scalable infrastructure and low client acquisition costs are favored.
PE ownership could bring tension between growth mandates and cultural fit, especially in high-touch advisory environments. Wealth management isn’t a product. It’s a relationship-based business built on intimacy, trust and often years of shared history. When a firm is sold to PE, even if nothing outwardly changes, the psychology of the relationship does.
European institutions are reconsidering U.S. exposure amid policy risk. PE firms must evaluate regulatory tailwinds (such as fiduciary standards and SEC scrutiny) and their impact on scalability. Trade wars and tariffs could dampen valuations and deal flow across sectors. Geopolitical and trade risks for wealth firms with global exposure or offshore capabilities may face added scrutiny.
Reshaping The Landscape
PE firms are reshaping the RIA landscape in profound ways — strategically, operationally and culturally. For example:
Valuation Multiples: PE-backed sellers can achieve a multiple of eight times EBITDA or higher, especially if their platforms are tech-enabled and client-centric. Sellers are no longer just cashing out — they’re rolling equity forward and staying involved in the next phase.
Sellers are no longer just cashing out — they’re rolling equity forward and staying involved.
Tech-Driven Efficiency: AI is raising the bar. Smaller firms risk falling behind unless they adopt scalable tech solutions. PE-backed buyers often present clear investment theses, onboarding teams and streamlined processes.
Strategic Considerations
At times, PE firms encounter issues in a potential transaction that require a specific strategic approach. Common strategic considerations include:
Custody Conversion Risk: If the target firm uses a custodian that is not aligned with the buyer, the buyer must estimate conversion cost and client attrition risk.
Bolt-On Potential: If the target firm has a strong regional brand and scalable operations, the PE firm’s strategy will likely be a tuck-in to a complementary firm.
Platform Enhancer: If the target firm can bring differentiated services (such as lending and ESG portfolios) to a deal, the PE firm may view it as enhancement to the platform of another firm that could benefit from those strengths.
PE As A Catalyst For Value Creation
PE’s engagement with the RIA space has evolved from opportunistic roll-ups to highly targeted, strategic plays aimed at reshaping the wealth management landscape. Recent transactions reveal a sharpened focus on platform institutionalization, client segmentation and service model differentiation. Three examples are:
Clayton, Dubilier & Rice’s acquisition of Focus Financial Partners highlighted that a controlling stake in one of the largest RIA aggregators shifted it toward institutionalizing RIA platforms.
Lovell Minnick Partners and Kelso’s partnership with Pathstone supported the acquisition of Crestone Capital. This provided a strategic push into ultra-high net worth and family office services.
Genstar’s involvement in the development and expansion phases of Mercer Advisors has allowed Mercer to acquire dozens of RIAs focusing on holistic financial planning.
PE’s deepening footprint in the RIA space is no longer just about capital — it’s about transformation.
PE’s deepening footprint in the RIA space is no longer just about capital — it’s about transformation. As our industry continues to mature, the winners will be those who balance strategic ambition with cultural cohesion, and who treat PE not as an exit, but as a catalyst for value creation.
Jim Roth is a Partner at Ascentix Partners, where Larry Roth, CEO of WSR, serves as Founder and Managing Partner. All decisions on editorial content are made by WSR’s editorial team.
