Industry Overview – Financial Advisory and CPA Firms
M&A activity in the financial advisory, RIA, and CPA sectors continues to draw strong buyer interest due to their recurring fee-based revenue, sticky client relationships, and highly predictable cash flow profiles. These businesses benefit from long-term client retention, strong referral dynamics, and countercyclical or recession-resilient service demand, especially in tax, financial planning, and wealth management. While broader middle-market deal volume has faced some unevenness across 2024–2025 due to macro uncertainty and interest-rate headwinds, M&A in the advisory and CPA sectors has remained resilient.
Valuation and Deal Structure in Books of Business
Books of business in financial advisory, insurance, accounting, or similar professional services, are typically valued based on the stability, predictability, and transferability of their revenue. Buyers primarily look at recurring revenue because it represents future cash flow they can reliably expect once the seller transitions clients. The cleaner and more recurring the revenue, the higher the valuation multiple. As the biggest risk for a buyer is client attrition after the sale, deal structure is almost always tied to client retention. The seller’s involvement after closing, helping with introductions and ensuring client trust, also affects both value and structure because a stronger transition tends to increase retention. Additional factors such as service diversification (tax plus wealth plus accounting), operational cleanliness, compliance documentation, and the efficiency of existing processes can materially influence valuation as well.
Fee-based advisory revenue, monthly accounting retainers, and annual tax or planning clients typically renew year after year with strong client loyalty, which supports multiples in the 2.0x to 4x range. In contrast to this, one-time or transactional revenue is significantly discounted, often trading at 1.0x or less as these engagements do not guarantee future earnings and carry higher risk for the acquirer. Buyers are ultimately pricing future stability, so the more consistent and renewable the revenue stream, the higher the multiple and the more attractive the acquisition. For this reason, client age also plays a large role in valuation and multiples. Younger affluent clients who will be retained for many years to come carry a higher value than older clients who will not have as long of a relationship with the firm.
Funding for Book of Business Acquisitions
SBA 7(a) loans are a popular funding vehicle for book of business acquisitions valued at $5 million or less. Banks generally do like funding book of business acquisitions, but only when the underlying revenue is predictable, well-documented, and historically stable. It is also very important for 7(a) loans that the buyer had industry experience or is currently working in the same field as they are purchasing. With these boxes checked, healthy books of businesses tend to pass through bank underwriting and become eligible for SBA loans.
Books of business are very goodwill-heavy making seller-financing another popular acquisition tool. Buyers like this method of acquisition because it lowers the initial cash needed and results in a lower debt burden for them. Sellers also may like this method if their retention is strong as it lowers the barrier for entry for a purchaser and may result in higher earnings over time. Sellers will typically finance anywhere from 20% to 60% of the total purchase price paid over a period of 3-7 years. This may be combined with other financing options such as bank debt, placing the seller second in line for repayment.
There are many other specific methods of acquisition, but in most cases a deal will involve a hybrid structure combining multiple sources of funding. One example of this would be a bank or other financial institution loan combined with an earnout based on client retention. These structures incentivise sellers to stay on board for a short period of time, ensure a smooth transition, and protect the buyers from added risks. The exact structure of the deal can vary wildly based on the seller’s needs and age along with the buyers and must be something that works well for both parties.
Interest Rates and Their Effects on Acquisitions
Applicable to all business types, when the Federal Reserve lowers interest rates, deal activity typically gets a boost because borrowing becomes cheaper and financing becomes easier to secure. Lower rates reduce the cost of debt, which improves cash flow coverage on acquisitions and makes banks more willing to lend. Buyers can stretch further on valuation since their debt service burden decreases, and sellers often see more competitive offers as financing constraints loosen. Private equity firms also become more active because leverage becomes more attractive and the return on cash sitting idle declines. Overall, falling rates tend to speed up deal timelines, increase buyer confidence, and bring sidelined buyers and sellers back into the market. For many small and mid-market transactions, especially those that rely on SBA or conventional bank financing, rate cuts often open the door to deals that were too expensive or too difficult to finance just a few months earlier
On a Lighter Note – Technology Was Not Their Strong Suit
A buyer reviewing a small CPA book of business kept noticing that the revenue totals did not seem to match how busy the seller claimed to be. After some gentle prodding, the seller sighed, opened the bottom drawer of his desk, and revealed a stack of twenty seven paper client folders that had never been entered into any software system. When the buyer asked why these clients were not included in the books, the seller simply replied, “They do not like computers, and honestly, neither do I.” What followed was a marathon onboarding and scanning process, but the buyer ultimately took all twenty seven clients. This goes to show the importance of systems kept in place, especially when selling a book of business and representing your true value.
On This Day – Notable Mergers & Acquisitions in December
December 2
● 2025 – The Prada Group completes its acquisition of Versace from Capri Holdings for $1.51 billion, a deal they had been keen to close for many years. https://www.pradagroup.com/en/news-media/news-section/25-12-02-pradagroup-versace-closing.html
December 5
● 2022 – Waverly Advisors completed their acquisition of Wall Advisors, an RIA founded in 1986 with $186 million in AUM. H. Lee Wall becomes regional director of Waverly Advisors in the transaction. https://www.investmentnews.com/ria-news/waverly-advisors-acquires-186-million-ria/229877
December 8
● 2023 – CAPTrust Financial Advisors acquired Trutina, a Seattle-based firm with over $1 billion in assets under management, greatly expanding their footprint in the Pacific Northwest. https://www.wealthmanagement.com/ria-news/ria-roundup-captrust-buys-1-1b-trutina-in-pacific-northwest
December 10
● 2024 – Arthur J. Gallagher acquired AssuredPartners for $13.45 billion in its largest acquisition to date, greatly increasing their middle-market property and casual insurance services across the U.S. https://www.imaa-institute.org/m-and-a-news/weekly-m-and-a-news-dec-9-to-15-2024/
December 16
● 2023 – Mercer Advisors completes its acquisition of Regis Management Company, a California-based UHNW RIA with over $5 billion in AUM. https://www.wealthmanagement.com/ria-news/ria-edge-roundup-no-holiday-for-ria-m-a
December 18
● 2023 – Pathstone acquired Rex Capital Advisors, a multi-family office with $1.5 billion AUM for an undisclosed amount. https://static1.squarespace.com/static/5410ec1be4b0b9bdbd0cc342/t/64413f17d9ee9b3e24fcae49/1681997593984/DeVoe+Deal+Book+Q1+2023.pdf
December 22
● 2023 – Allworth Financial acquires two registered investment advisory firms, Silicon Valley Wealth Advisors and Hall Private Wealth Advisors totaling over $650 million in assets under management. https://www.dakota.com/resources/blog/december-2023-financial-advisor-and-ria-moves-and-acquisitions
December 29
● 2021 – Accounting firms Arledge and Associates and Hyde & Co., two regional accounting firms in Oklahoma merged in order to combine their experience and expertise and grow their client base. https://journalrecord.com/2021/12/29/accounting-firms-arledge-hyde-merge/
December 30
● 2021 – IRIS Software group acquires AccountantsWorld, a cloud solutions company working with North American accountants to bolster their services. https://www.dakota.com/resources/blog/december-2023-financial-advisor-and-ria-moves-and-acquisitions
December 31
● 2022 – EP Wealth Advisors closed their acquisition of Cribstone Capital, a firm based in Maine with $365 million in assets under management. This end-of-year deal continued their rapid expansion into the Northeast. https://www.wealthmanagement.com/ria-news/ria-edge-roundup-no-holiday-for-ria-m-a
About Topsail Capital Advisors – Topsail Capital Advisors is a sell-side Mergers & Acquisitions advisory firm focusing on mid-size to lower middle-market, privately held businesses throughout the US. Topsail fills the gap between traditional main street business brokerage firms and the larger investment banking institutions. TCA core services includes valuations, exit planning, sell-side advisory, and capital solutions. Learn more at topsailcapitaladvisors.com.