How a $300M RIA Delayed Its Sale to Maximize Value
Context
When a $300M Registered Investment Advisor considered selling, they realized they weren’t ready to attract premium buyers or command the valuation they envisioned. Instead of rushing to market, the leadership team delayed the sale by 24 months to resolve critical issues. This decision not only strengthened their firm but ultimately led to a significantly higher sale price.
The Challenges
- Operational Inefficiencies
- Key processes, such as client onboarding and compliance, were inconsistent and lacked documentation.
- Outdated technology created manual workarounds that slowed down service delivery.
- Talent Gaps
- The G2 advisor wasn’t connected to clients, raising concerns about client retention post-sale.
- Some staff members were underperforming or simply occupying roles without contributing meaningful value.
- Inconsistent Growth
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- Organic growth lacked structure, relying heavily on ad hoc referrals.
- Inorganic growth opportunities were pursued sporadically, with no clear integration strategy.
- Limited Scalability
- The firm’s systems and processes weren’t optimized to support future growth, making it less attractive to buyers.
The Solution: A Two-Year Optimization Plan
Streamlining Operations
The firm began by documenting and standardizing all key workflows, including client onboarding, compliance, and portfolio management. This eliminated inconsistencies and reduced bottlenecks. Outdated technology was replaced with modern, integrated systems that streamlined operations, reduced manual inefficiencies, and improved client reporting. Leadership also introduced operational KPIs to track performance and ensure continuous improvement, providing a clearer picture of the firm’s readiness to scale.
Developing and Aligning Talent
The G2 advisor received focused training to deepen client relationships and prepare for a leadership role, ensuring a smooth transition for clients and reassuring potential buyers. Underperforming staff were reassigned or replaced with individuals who were better aligned with the firm’s goals. Additionally, new hires were made in operations and client service to fill critical gaps. These steps transformed the firm into a high-functioning team with the right talent in the right roles.
Strengthening Growth Strategies
The firm overhauled its growth strategies to add structure and predictability to its expansion efforts. Organic growth was bolstered by implementing a formal client referral program and enhancing digital marketing efforts to attract new clients. Inorganic growth was also addressed by developing a playbook to evaluate acquisition targets and ensure smooth integrations, laying a solid foundation for future M&A activity.
Building for Scalability
Process improvements allowed the firm to increase its client capacity by 30% without requiring additional hiring. This demonstrated the scalability of the firm’s operations and improved its appeal to potential buyers. Additionally, incorporating the G2 advisor into the long-term succession plan ensured continuity for clients, addressing a key concern of prospective acquirers.
The Outcome
After two years of disciplined effort, the firm achieved remarkable results:
- Operational Transformation: Processes were streamlined, reducing inefficiencies and improving service delivery.
- Stronger Team: The G2 advisor became a trusted client relationship manager, and the staff was optimized for performance.
- Predictable Growth: Both organic and inorganic strategies were yielding consistent and measurable results.
- Higher Valuation: The firm’s profitability and readiness to scale attracted a larger pool of buyers, increasing the sale price substantially.
Key Takeaways
This case highlights the value of investing time and resources into preparing a firm for sale. Addressing operational inefficiencies, aligning talent, and strengthening growth strategies can result in:
- A significantly higher valuation.
- Better alignment with ideal buyers.
- A smooth transition that preserves legacy and client relationships.
Iron River specializes in guiding firms through this process, ensuring they achieve maximum success when the time comes to sell.