Larger firms, rising multiples: Is this the new standard for advisor M&A?

The M&A landscape for financial advisory practices is heating up, with 2025 emerging as a year of larger deals, richer valuation multiples and more complex terms.

According to the latest industry benchmarking report from Succession Resource Group, drawn from 171 completed transactions totaling more than $14 billion in assets under management, there’s a clear shift away from small, relatively simple handoffs to deals marked by deeper capital structures, advanced financing and a heavier presence of institutional buyers.

Among the most notable trends in 2025 was a meaningful uptick in multiples paid for recurring revenue and profitability.

Transactions valued on an EBITDA basis averaged 9.98x business earnings, while recurring revenue books commanded an average of 3.27x. This increase continued a pattern of expanding valuations seen the prior year, reflecting strong buyer confidence despite broader macroeconomic uncertainty.

One quarter of deals paid above 3.5x recurring revenue, with more than one in five surpassing 4.0x, a sign that strategic acquirers are willing to pay premiums for quality revenue streams.

Third-party financing also played a larger role in closing deals, rising to 56 % of transactions as interest rates steadied and lenders grew comfortable extending leverage. In many cases, bank and broker-dealer financing now supports up to 70-80% of purchase prices, with sellers taking back notes on the balance.

SRG’s data shows a pronounced decline in deals involving buyers from outside the seller’s home state, dropping to 24.8 % from a prior peak. At the same time, the buyer base has become more concentrated around experienced acquirers, reducing the ratio of buyers to sellers and suggesting more competitive processes.

SRG’s President David Grau Jr. attributed rising valuations to the caliber of practices on offer and the financial discipline of buyers.

“The valuations paid today are higher than they've ever been before, but the same core fundamentals still apply - the deals have to cash flow.,” he said. “Sellers can get a higher value than we've ever seen, but it is paid for large (multi-billion-dollar RIAs), well-run firms, and the value is paid ‘on terms’ meaning most of that value is contingent.”

Who’s buying?

Internal equity transactions, where succession occurs via sales to existing partners, expanded to 32% of all deals, reflecting a maturing succession planning ecosystem within advisory businesses. At the same time, nearly half of firms making internal transitions brought in outside capital to support equity buys by next-generation leadership teams.

SRG also observed that earn-outs are increasingly used to bridge valuation expectations and share risk between buyers and sellers.

Large private equity groups and aggregator platforms continued to invest aggressively, often structuring deals with smaller initial cash downs and significant future equity or earn-outs. These flexible structures are enabling sellers to access above-market valuations while remaining tied to growth outcomes.

READ: Wealth management M&A shattered records in 2025, Berkshire Global Advisors reveals

The SRG team forecasts continued expansion of M&A activity in 2026, albeit with a focus on larger, well-capitalized buyers and fewer but higher-value deals. Creative deal terms, innovative financing and a continued premium on firms with robust financial performance are expected to shape the market.

“Founders who focus on building a sustainable firm, optimizing their business, and remaining focused on the best fit for their clients at their exit will always get the best value. Period,” concluded Grau Jr.