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What would you pay for this book?

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eggward View Drop Down
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    Posted: Jun/02/2021 at 8:08am
I'm interested to hear valuations from both RIAs and those at brokerage firms.  I know this has been discussed before but I couldn't find a recent discussion and want to know if valuations have changed.

T-12 $750k, 90% recurring revenue, average age is early 60s
Seller is at a b/d and wants 2.5x T-12 and I think that's "a bit high"
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WarPig View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote WarPig Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 8:12am
Originally posted by eggward eggward wrote:

I'm interested to hear valuations from both RIAs and those at brokerage firms.  I know this has been discussed before but I couldn't find a recent discussion and want to know if valuations have changed.

T-12 $750k, 90% recurring revenue, average age is early 60s
Seller is at a b/d and wants 2.5x T-12 and I think that's "a bit high"

Snap it up.  That's a great deal.  Valuations are much higher than that right now.
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B24 View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote B24 Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 8:27am
That's a no-brainer.

Let's just assume you get zero revenue from the 10%, so let's call the revenue $675K. So you're paying $1,875,000 for that revenue. If someone said to you "you give me $10,000, and I'll give you $3,600 a year for the next 10-20 years", you would do it in a heartbeat.

And it's not like you are giving that all up front. 

Sure, there's taxes and slippage and all kinds of variables. But if the average age is early 60's, that means there's lots of people in their 40's and 50's with a lot more assets to be rolled over in the future.

You're insane to say no.
"If Bellicheat pulls that rabbit out of his a$$ with this kid at quarterback, I'll personally kiss his ring." - Sporsfreak, 09/20/16

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Post Options Post Options   Thanks (0) Thanks(0)   Quote eggward Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 9:01am
Originally posted by WarPig WarPig wrote:

Originally posted by eggward eggward wrote:

I'm interested to hear valuations from both RIAs and those at brokerage firms.  I know this has been discussed before but I couldn't find a recent discussion and want to know if valuations have changed.

T-12 $750k, 90% recurring revenue, average age is early 60s
Seller is at a b/d and wants 2.5x T-12 and I think that's "a bit high"

Snap it up.  That's a great deal.  Valuations are much higher than that right now.
 
And you're pricing that as an RIA - yes?
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WarPig View Drop Down
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Post Options Post Options   Thanks (0) Thanks(0)   Quote WarPig Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 9:27am
Originally posted by eggward eggward wrote:

Originally posted by WarPig WarPig wrote:

Originally posted by eggward eggward wrote:

I'm interested to hear valuations from both RIAs and those at brokerage firms.  I know this has been discussed before but I couldn't find a recent discussion and want to know if valuations have changed.

T-12 $750k, 90% recurring revenue, average age is early 60s
Seller is at a b/d and wants 2.5x T-12 and I think that's "a bit high"

Snap it up.  That's a great deal.  Valuations are much higher than that right now.
 
And you're pricing that as an RIA - yes?

Guys are getting 4x in the RIA space.  Hacksaw and I guy I know in real life made me a 4.5x offer but I turned it down.

Dude I know with a 700m + RIA got a huge deal but based on EBITA
Mission knows a guy that got a huge deal in the BD world but based on EBITA

Both deals, based on my rough math, were anywhere between a 4-5x multiple.

.... Money is so cheap, you are borrowing at 1/2 the cost today so the deals are better.  A 2.5x is a steal.  If you are not interested, let me know.  I'll buy it with Helado.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Iamlegend Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 11:52am
Is all of that recurring revenue advisory or a lot of trails?
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Post Options Post Options   Thanks (0) Thanks(0)   Quote helado Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 11:55am
Originally posted by WarPig WarPig wrote:

Originally posted by eggward eggward wrote:

I'm interested to hear valuations from both RIAs and those at brokerage firms.  I know this has been discussed before but I couldn't find a recent discussion and want to know if valuations have changed.

T-12 $750k, 90% recurring revenue, average age is early 60s
Seller is at a b/d and wants 2.5x T-12 and I think that's "a bit high"

Snap it up.  That's a great deal.  Valuations are much higher than that right now.

I agree.  I'd pay that in a heartbeat!  
My posts are for abrasive entertainment only. Nothing posted is investment, legal, tax or any type of advice, nor is anything mentioned true or even based on real events. Posts are complete fiction.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Moraen Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:10pm
Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?

He said 90% in the original post.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Iamlegend Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:14pm
Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?

He said 90% in the original post.

Yes, but he didn’t break down the RR between trails and advisory. Trails from C shares for instance are less valuable than advisory revenue. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Moraen Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:15pm
Originally posted by Iamlegend Iamlegend wrote:

Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?

He said 90% in the original post.

Yes, but he didn’t break down the RR between trails and advisory. Trails from C shares for instance are less valuable than advisory revenue. 

Does it matter if it's $750k and 90% of it is recurring? He knows that $675k of it is recurring.
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Would need to know average account size, split of qual/non-qual, inflows/outflows, etc. 

On the surface a book with average age in the 60s is not too appealing to me personally. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote B24 Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:35pm
Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?

He said 90% in the original post.

Yes, but he didn’t break down the RR between trails and advisory. Trails from C shares for instance are less valuable than advisory revenue. 

Does it matter if it's $750k and 90% of it is recurring? He knows that $675k of it is recurring.

But if 80% of it is C-shares paying out at less than 100% on the B/d side, then it's worth less than advisory revenue paying out at 100%.
"If Bellicheat pulls that rabbit out of his a$$ with this kid at quarterback, I'll personally kiss his ring." - Sporsfreak, 09/20/16

"Jags/Vikes Super Bowl. Write it down" - Sportsfreak 01/19/18
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Post Options Post Options   Thanks (0) Thanks(0)   Quote B24 Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:36pm
Originally posted by PEACH_cm PEACH_cm wrote:

Would need to know average account size, split of qual/non-qual, inflows/outflows, etc. 

On the surface a book with average age in the 60s is not too appealing to me personally. 

OK Windy
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Moraen Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:37pm
Originally posted by B24 B24 wrote:

Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?

He said 90% in the original post.

Yes, but he didn’t break down the RR between trails and advisory. Trails from C shares for instance are less valuable than advisory revenue. 

Does it matter if it's $750k and 90% of it is recurring? He knows that $675k of it is recurring.

But if 80% of it is C-shares paying out at less than 100% on the B/d side, then it's worth less than advisory revenue paying out at 100%.

Gotcha. That makes sense.
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Moraen Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:37pm
Stupid B/D stuff messing up the math.
I come in peace. I didn’t bring artillery. But I’m pleading with you, with tears in my eyes: If you fuck with me, I’ll kill you all. - General James Mattis

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Post Options Post Options   Thanks (0) Thanks(0)   Quote WarPig Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:44pm
Originally posted by B24 B24 wrote:

Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Originally posted by Moraen Moraen wrote:

Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?

He said 90% in the original post.

Yes, but he didn’t break down the RR between trails and advisory. Trails from C shares for instance are less valuable than advisory revenue. 

Does it matter if it's $750k and 90% of it is recurring? He knows that $675k of it is recurring.

But if 80% of it is C-shares paying out at less than 100% on the B/d side, then it's worth less than advisory revenue paying out at 100%.

That would be even better.  Book would be undervalued.  
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Post Options Post Options   Thanks (0) Thanks(0)   Quote WarPig Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 12:48pm
The problem with alot of these BD books is the variable annuities.  Alot of guys sold the shit out of L shares and the just sit there.  Clients thinking they are FREEEEEE..... with a decent sized benefit base.  

I looked at a book with a friend of mine.  It was a pile of trash as we got into it. 
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Post Options Post Options   Thanks (0) Thanks(0)   Quote eggward Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 1:52pm
Originally posted by Iamlegend Iamlegend wrote:

Is all of that recurring revenue advisory or a lot of trails?
 
80% advisory fees
10% mutual fund & insurance trails
10% commissions
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Post Options Post Options   Thanks (0) Thanks(0)   Quote newbieRIA Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 3:11pm
Originally posted by PEACH_cm PEACH_cm wrote:

Would need to know average account size, split of qual/non-qual, inflows/outflows, etc. 

On the surface a book with average age in the 60s is not too appealing to me personally. 

that's because you and hacksaw belong in the loser for life club.  
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Post Options Post Options   Thanks (0) Thanks(0)   Quote Nathan Explosion Quote  Post ReplyReply Direct Link To This Post Posted: Jun/02/2021 at 3:16pm
Originally posted by newbieRIA newbieRIA wrote:

Originally posted by PEACH_cm PEACH_cm wrote:

Would need to know average account size, split of qual/non-qual, inflows/outflows, etc. 

On the surface a book with average age in the 60s is not too appealing to me personally. 

that's because you and hacksaw belong in the loser for life club.  

hmmmmmm   that's productive.
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