Are you ready for private equity?

A private equity backer might sound very appealing right now. In the booming wealth management M&A market of 2026, it’s true that RIA owners can strike great deals. But a PE backer will only benefit your business as far as you plan ahead to use that capital.

At this point, we can all agree that private equity has made an indelible impact on the wealth management space. In the past, sellers wanted to see a mix of potential partners, not limited to those backed by capital backers. Today, they just want to hear about each buyer’s relationship with their capital backers. There are more options available for majority and minority backing than ever before. We can reasonably conclude that private equity is here to stay and make waves in our industry. 

Interestingly, the shape and form of what it means to take capital from a third party has evolved almost as rapidly as the industry itself. Less than a decade ago, large, international private equity firms were the primary source of outside capital to wealth managers, and the only wealth managers deemed worthy of investment were those with tens of billions of assets under management. Even then, it felt impossible to accept outside capital without giving up control and majority ownership.

Fast forward to today, and private equity-backed buyers now represent the majority of active acquirers in wealth management. In our experience advising sellers over the past year, every buyer that ended up winning a process had private capital behind it. At the same time, the threshold for investment has dropped dramatically, with many capital providers now willing to take minority stakes in firms with as little as $750 million of AUM.

But just because these options exist, it does not necessarily mean that taking an investment is the right decision for your business. It feels great to know that you have built something so valuable that several parties are interested in taking a stake in it, especially at multiples that felt impossible even a few years ago. 

But here is the hard truth: these PE firms are not interested in staking your business so you can cash out. They are in the business of multiplying capital for their investors, and they are looking at you, the RIA owner, to articulate how you can help them do it.

It is okay to want to monetize a portion of your hard work. So much so that it even has a name: secondary capital. But an investor needs to understand what you plan to do with the portion of their investment that is not going into your pocket: the primary capital. And although capital-backed M&A seems to be all the rage these days, many private equity backers do not expect their investments to be used to fuel inorganic growth. 

Looking within to understand how you can use an investment to fuel your growth will make your conversations with capital backers much more fruitful. Is it time to build out a C suite? Invest in technology to improve productivity? Embark on a multi-year digital marketing campaign? Build out a tax practice? Hire a few estate attorneys? Maybe what you're thinking is a five-to-seven year exercise that involves some or all of these! 

Lofty ambitions paired with careful planning are key to finding a minority or majority partner that can help you achieve your goals. Think carefully about what you could achieve with more capital before you start these conversations.

The wealth management industry is built on a foundation of ambitious leaders that make sound decisions on behalf of their clients, employees, and businesses. Finding a capital backer is one more decision that can help you achieve your goals, so long as your objectives are aligned with the partner you select.
 

Jessica Polito is founder and CEO of Turkey Hill Management.