A number of issues arise when valuing registered investment advisors, according to a new white paper from Mercer Capital. These issues include:
- How to normalize cash flow to determine the profitability of an RIA;
- How to compare different investment management firms to determine what risk-adjusted valuation multiples to apply;
- How to evaluate the growth potential of one firm relative to the industry or relative to other firms;
- What public company multiples say about how a private RIA is valued; and
- Are industry transaction multiples a useful benchmark in valuing an investment management firm?
The white paper, “Valuing RIAs,” written by Mercer’s Matthew R. Crow and Brooks K. Hamner, gives an overview of these issues. The authors will conduct a webinar with more details on October 3 that is free to partners and staff of investment management firms.
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