Valuation isn’t just about the multiple. It’s the story your business tells, the structure, sustainability, and quality beneath the surface.
In wealth management M&A transactions, conversations about valuation often begin with one question:
What valuation multiple will I get?
Sometimes it’s framed around revenue. Sometimes EBITDA.
But if you stop there, you’re missing the bigger picture.
These multiples are outcomes, not inputs. They reflect something deeper: the structure, sustainability, and quality of the business beneath the numbers.
Some deals are priced based on revenue multiples, others on EBITDA multiples, and often both are considered.
In general, revenue multiples are more commonly used when assessing smaller firms. In these models, owners often draw compensation by paying themselves excess profits after all other expenses. This can blur the line between what they earn as an advisor and what the business generates in profit. As a result, EBITDA can be harder to normalize, and revenue provides a more practical lens for assessing value, even if it doesn’t tell the whole story.
Still, not all revenue is valued equally. AUM-based fees, fee-only planning, and insurance all carry different levels of predictability, scalability, and integration, and therefore command different multiples. With larger firms, where financial reporting is more structured and ownership is more distinct from day-to-day delivery, EBITDA multiples tend to offer a clearer, more consistent view of value. They reflect operating profitability and allow for more objective comparisons across firms.
There is a relationship between the two. Firms with strong margins and efficient operations often command higher EBITDA multiples and may justify a higher revenue multiple as well. The key insight is that revenue and EBITDA multiples are not standalone indicators. They reflect the underlying structure, sustainability, and quality of the business. Understanding how your revenue converts into EBITDA, and how both contribute to long-term value, is critical to knowing what your firm is really worth.
Understanding the difference between revenue and EBITDA is a strong starting point, but it’s just the beginning. To truly understand what drives value in a wealth management business, you need to look at the full picture.
Here are six foundational elements that every advisor should consider when thinking about what their business is really worth:
This is the headline number, but it’s only part of the story.
Not all revenue is created equal.
AUM-based revenue tends to be the most highly valued. It is recurring, predictable, and scalable—especially when delivered through a consistent, planning-first experience.
Fee-only planning revenue, while valuable in some models, is often less stable unless paired with ongoing AUM. It’s typically dependent on new client flow and can be harder to scale.
Insurance revenue is less predictable and more transactional, but it plays an important role in delivering a full client experience. When well integrated, it complements the planning process and adds depth to client relationships.
Two firms with identical top-line revenue can have very different valuations depending on the type, quality, and sustainability of their income streams.
EBITDA stands for Earnings Before Interest, Taxes, Depreciation, and Amortization.
This is a common way to measure a firm’s operating profitability, often used to normalize financials and compare firms more objectively.
In reality, EBITDA is rarely black and white. Sellers often adjust or shift expenses to increase reported EBITDA. Assumptions are made, salaries normalized, and certain costs added back.
One of the hardest parts of any deal is understanding a firm’s true EBITDA, not just what’s presented on a spreadsheet. EBITDA is an important metric to review, but it’s just as important to look beyond the number to understand how the business actually operates.
One of the clearest signs of future value is momentum.
Organic growth of 5 to 10 percent of revenue per year is a strong signal of a healthy, scalable business. It shows that what you’ve built resonates with your client community and that it can grow without relying solely on market returns or acquisitions.
Sustainable growth demonstrates that the opportunity isn’t just in what exists today, but in where the business can go next.
A firm with a repeatable, documented client experience is more valuable than one built on founder instinct.
Great businesses don’t just deliver results. They deliver them consistently.
Culture isn’t just a feeling, it’s a reflection of everything you do.
A healthy culture doesn’t happen by accident. It’s built intentionally, and it shows up in every part of the business.
In M&A, cultural alignment is one of the most important predictors of success. A firm with a strong team and well-defined culture is more likely to:
A business that depends entirely on one person is risky. A business with a strong team and healthy team culture is built to last.
Not every great business is the right fit for every buyer.
Different acquirers prioritize different things. At PWL, we believe that shared philosophy is essential for a deal to truly succeed, for the advisors, the clients, and the long-term future of the business.
Our approach is unapologetically planning-first and evidence-based. This is embedded in how we serve clients, make decisions, and build our team.
When there’s alignment on philosophy and purpose, transitions feel seamless:
Fit doesn’t mean identical. But it does mean shared values, mutual respect, and a common commitment to client-first advice.
So what is your business really worth?
It’s not just about the multiple.
It’s about the model, the mindset, and the structure behind the numbers.
