Independent RIAs confronting succession are often presented with what appears to be a binary choice. They can remain independent and accept the constraints that may accompany limited scale, concentrated leadership and finite resources. Alternatively, they can sell to a national aggregator, gaining access to capital and infrastructure while relinquishing some degree of ownership or control.
Both paths can work but they aren’t the only options. A peer merger is the third path, and that is what my firm chose in our merger with The McEwen Group. Though a merger may not be the right solution for every independent firm, this experience illustrates why prospective sellers should consider a wider range of succession options and begin evaluating them well before a transition becomes urgent.
Goals Come First
Succession planning is frequently treated as synonymous with retirement, an exit or monetization. More often than not, that framing can be too narrow. Before ever discussing potential buyers, valuations or deal structures, owners should determine what succession is ultimately intended to accomplish. An owner focused on preserving culture, developing future leaders and reassuring clients may evaluate potential partners differently from one primarily seeking scale or maximum near-term value.
For Prairie Wealth, succession was not primarily about facilitating the founder’s retirement. It was about building a business capable of continuing to grow and serve clients without depending on one individual’s leadership.
A legal succession agreement can identify who assumes control if something happens to the founder. It does not, by itself, create a deeper leadership bench, expand the firm’s capabilities or give clients meaningful familiarity with the people who may eventually lead the organization. That is why succession should be addressed while owners still have the time and flexibility to be deliberate. They should define what succession should accomplish for clients, employees and the business before evaluating specific transactions.
Getting bigger doesn’t automatically create a better firm.
Scale is among the most frequently cited reasons for RIA consolidation. But getting bigger doesn’t automatically create a better firm. Owners should identify the specific outcomes they expect additional scale to produce. Those benefits might include broader planning capabilities, stronger investment resources, improved technology, greater operating efficiency, expanded career paths or a more resilient leadership structure.
In this instance, Prairie Wealth had already developed expertise in municipal bonds and alternative investments while The McEwen Group brought a more equity-focused perspective, as well as experience in financial, estate and succession planning for high net worth and ultra-high net worth families. The team also added experience with strategies such as cash balance plans and captive insurance.
The strategic value didn’t come simply from crossing the $1 billion threshold. It came from what the combined organization could offer clients and employees that neither firm could provide as effectively on its own.
A strong merger partner doesn’t need to operate an identical business. Quite the opposite can be true. Complementary strengths may create much of the transaction’s value. However, it’s key that the firms align on the principles that are difficult to change.
Cultural Compatibility
Prairie Wealth and The McEwen Group shared a planning-first philosophy, a commitment to personalized advice and an emphasis on long-term client relationships. Both also had deep Nebraska roots and histories of involvement in their local communities. That alignment created a strong foundation despite differences in investment capabilities and professional backgrounds.
The real test is how each firm behaves.
RIAs should examine cultural compatibility beyond mission statements and marketing language. The real test is how each firm behaves: how advisors communicate with clients, make investment decisions, develop employees, resolve disagreements and balance growth with service. For firms built around highly customized advice, a partner favoring standardized portfolios or centralized decision-making may create tension, even when the economics appear attractive.
The leaders at Prairie Wealth and The McEwen Group had known each other professionally for nearly a decade before completing the merger and that relationship gave both sides confidence in their shared values and allowed for candid discussions about ownership, leadership and the future of the business.
Carefully Planning Control
Mergers, especially those with peers, can require especially careful planning because control may be less obvious than in a traditional acquisition. The parties should address decision-making authority, equity ownership, leadership responsibilities, compensation, branding and dispute resolution before the transaction is finalized.
Mergers, especially those with peers, can require especially careful planning because control may be less obvious than in a traditional acquisition.
In this case, The McEwen Group joined Prairie Wealth as equity partners rather than simply selling a book of business. The group retained its existing name within Prairie Wealth, while Managing Director Tim McEwen assumed a senior leadership role in Prairie Wealth. Those decisions reflected the partnership the firms intended to build, but they also required clearly defined roles and expectations.
Clients And Employees
It’s essential to also evaluate the transaction from the client’s point of view. Prospective sellers can become absorbed in valuation, equity, titles and operating structures, whereas clients usually have more practical concerns.
Clients tend to focus on practical implications, including whether they will continue working with the same people, whether their investment strategy will change and whether the transaction signals the owner’s retirement. Prairie Wealth’s clients needed to understand that existing relationships and the principles underlying their planning and investment strategies would remain intact. They also needed a clear explanation of how the combination would deepen planning resources, broaden investment capabilities and strengthen the firm’s ability to serve future generations.
Employees deserve similar clarity. A successful combination should provide the professionals who helped build both firms with a clearer view of how their roles, responsibilities and career opportunities will evolve.
A merger of this sort will not be right for every independent RIA, and the right partner may not always exist. The fact is that some firms will benefit from joining a national organization, while others may have the leadership and resources to remain fully independent. The broader lesson is that those seeking a viable succession plan should not assume their only choices are to remain unchanged or sell to the largest available buyer.
Succession does not have to begin with an exit. It can begin much earlier, with a deliberate effort to build a firm capable of serving clients, developing leaders and preserving its mission beyond any one individual.
Craig Hundt is the Founder and CEO of Prairie Wealth Advisors.
