Equity for Advisors “No Longer Optional” If RIA Sellers Want Premium Valuation – Report

Charles Paikert

26 March 2026

Want to receive a premium valuation for your RIA in an already red hot sellers’ market? Start making sure your team can receive equity. “It’s not optional anymore,” said Brandon Kawal, partner at Phoenix-based consulting firm Advisor Growth Strategy.

While multiples in the seemingly never-ending sellers’ market for RIAs continue to rise, “there is a measurable gap between the firms that create a premium and those that do not,” according to the firm’s 2026 RIA Deal Room Report.

The median adjusted multiple for RIAs last year was 11.6 times earning before interest, taxation, depreciation and amortization – an all-time high and 5 per cent more than 2024. But premium firms can command an additional 20 per cent, according to the report. “Elevating and managing an equity table are no longer optional for sellers who expect a premium valuation,” the report stated.

“Tell me about your team”
The question Advisor Growth Strategies hears most from buyers is “tell me about the team,” Kawal said. Consequently, having talent financially aligned with the firm is now critical, he added. “The bottom line for most participants is that you can invest in talent now or pay later,” the report stated.

Buyers see a stable, committed advisory team key to future organic growth, Kawal said. Indeed, the percentage equity buyers are including in deals rose 4 per cent to an average of 29 per cent from 2024 to 2025 and is expected to jump to 33 per cent this year.

Equity is the “favored tool of the day” to promote alignment in a transaction, according to the report. “Given the premium attributes for sellers in today’s market, RIAs must consider partnership as the most marketable tool available to maximize optionality,” the report concluded.

In an expensive, high demand market, cash-strapped next-generation advisors may not have the ability to buy in without assistance. But firms that “work out a compromise with their team today will be in a stronger negotiating position tomorrow,” the report stated. “Those that do not will either pay a premium at exit or struggle to find a buyer.”

Is the middle market really vanishing?
The Deal Room report also warned of a “vanishing middle market” for firms with between $500 million and $5 billion in AuM; they will “be forced to either grow and scale or be forced to sell to a larger platform.”

Surviving in the middle has become “particularly challenging,” the report maintained, as the “arms race for size and reach put pressure on the middle market to evolve faster, or risk struggling to compete.” As a result of facing increasing complexity, the middle market has become “a target rich environment for buyers,” according to the report.

But there’s been pushback from industry observers who say that better and more affordable technology, accelerated by artificial intelligence, makes it possible for smaller and mid-sized firms to hold their own quite nicely.

“AI absolutely changes the math on scale,” said Sean Bailey, editor-in-chief of Horsesmouth, a practice management consultancy. “The traditional advantage of large firms has been leverage. More analysts, more service staff, more marketing muscle. AI is functionally giving that leverage to smaller firms at near zero marginal cost.”

Advisors who can automate meeting prep, follow-ups, research, and even parts of planning workflows are able to compress what used to require a team into something one person can run by themselves, Bailey added.

Firms that can integrate AI into core “will be able to remain independent and compete effectively,” Bailey said, “while others may still feel pressure to scale through M&A.”

AI will enable firms to create the functional equivalent of a larger support team without having to add headcount at the same rate as growth, dramatically reshaping what scale looks like for RIAs, Savvy CEO Ritik Malhotra told advisors at a recent industry event hosted by AdvisorHub.

Kawal acknowledged these developments but argued that “absolute costs are still going up. It’s harder to be in the middle. You either have to partner or invest heavily.”