Advisors are inflating the value of their practices, according to new research by Cerulli Associates.
On average, advisors believe their practices are worth 2.8 times their total revenue, but for those advisors who actually purchased a practice within the past 12 months, the average revenue multiple paid was 2.2 times revenue, explains Kenton Shirk, associate director at Cerulli, in the Boston-based research firm's fourth quarter edition of The Cerulli Edge–Advisor Edition.
“With many buyers in the market, advisors’ expectations regarding the value of their practices are high,” Shirk says.
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
