With sky-high multiples in RIA M&A, culture matters more than valuation

Wealth management dealmakers have reached cruising altitude, writing checks faster than ever as consolidation continues among registered investment advisors (RIAs).

According to Echelon’s RIA M&A Deal Report for 3Q25, 125 transactions closed during the quarter, matching the quarterly record previously set in 4Q24. Through September, 345 transactions closed, representing a 44.4% increase compared to the first three quarters of 2024, eclipsing 2022’s record of 341 transactions.

Activity in the industry has reached fever pitch, with consolidators gobbling up 53% of all acquisitions, their biggest slice of the pie since 2021. Private equity (PE) capital and the race to cement succession plans are creating urgency, and competitive bidding wars are keeping valuations stubbornly elevated – even as the broader economy continues to send mixed signals. Price multiples have held steady, however, especially for firms with strong growth prospects or those with distinct client niches.

But underlying the celebratory champagne toasts and news announcing "strategic partnerships," a more sobering question emerges: is this torrid pace sustainable, and at what cost to firm culture and alignment once the deal is closed and the wheels touch down?

Are the numbers clouding reality?

While deal activity is breaking records, the declining asset base tells a less exuberant tale. Total assets under management (AUM) changing hands fell sharply – reaching just $169.1 billion in the first half of 2025, a 58% decline from the year before. Meanwhile, average AUM per deal also plunged 65% versus the same period in the prior year.

Concurrently, sellers are encountering a widening spread in valuations. Depending on the buyer’s strategy and how the firm is positioned, the gap between the highest and lowest offers can reach 30%. That divergence underscores just how much nuance exists beyond simple multiples.

Private equity’s growing dominance may also signal turbulence ahead. Some PE-backed buyers pursue short-term flipping strategies, banking on the ability to resell at ever-higher valuations. But in a market facing macroeconomic uncertainty and tighter regulatory scrutiny, such approaches may not be sustainable.

And while dealmakers focus on closing transactions, cultural and integration risks can loom large. Aggregators, in particular, face the challenge of blending multiple firms into a cohesive whole. Misaligned philosophies can erode client trust and lead to advisor turnover.

A PwC study found that 82% of respondents claimed that significant value was destroyed in an acquisition, while also reporting an exodus of more than 10% of key employees upon completion of the deal. In the same study, a shocking 65% of acquirers said cultural issues hampered value creation in their last deal.

The lesson is clear: financial engineering and premium multiples don’t guarantee long-term value.

A cultural mandate

The RIA industry’s heartbeat relies on the quality of relationships, both with clients and within a practice. When buyers and sellers share a service philosophy and vision, deals can strengthen firms rather than destabilize them. Conversely, if a transaction prioritizes valuation above all else, the risk of undermining advisor autonomy and client loyalty may increase.

Organic growth further highlights the importance of culture. Schwab’s 2025 RIA Benchmarking Study found that top-performing firms doubled revenue growth and attracted 85% more new clients at the median as compared to other firms. That kind of performance is typically the result of strong teams, shared values and consistent client service.

Put simply, culture is a core driver of sustainable value creation in the industry, and the factor that helps firms stay aloft long after the initial excitement of a deal wanes.

Select an aligned co-pilot

The allure of headline-grabbing multiples can make it tempting to chase the highest bid. But the RIA ecosystem is built on trust and enduring relationships, and a firm’s true measure of success is how it emerges post-acquisition.

Firms that prioritize cultural alignment and shared vision over valuation alone will likely be better positioned for sustainable growth – ensuring that the practices they’ve worked so hard to build continue to soar post-deal.

Craig Robson, CFP, CIMA, CDFA, is a founding principal and managing director at Regent Peak Wealth Advisors, an Atlanta-based registered independent advisor serving creators of significant wealth across the country.