When advice firms think about their future value, the conversation usually starts with valuation multiples. How much is the business worth? What multiple will a buyer pay? How can revenue and profits be increased?

These are important questions to ask, but they only tell part of the story.

In reality, some firms achieve excellent valuations and attract significant buyer interest, while other very similar firms struggle to compete despite appearing attractive and financially strong. The difference often comes down to a factor that receives far less attention than revenue multiples: saleability.

Today, buyers are not simply purchasing a revenue stream. They are acquiring a regulated business, client relationships, operational processes, staff, technology, and perhaps most importantly, future risk. The firms that command the strongest interest and set themselves apart from the pack are those that can clearly demonstrate robust compliance systems, effective governance, and a well-controlled operating environment.

The valuation landscape

Traditionally, smaller financial advice firms have been valued using a recurring revenue multiple. This remains the most common approach within the market.

However, there has been a noticeable shift in recent years, particularly among larger and more scalable firms. Increasingly, private equity-backed consolidators and sophisticated acquirers are focusing on EBITDA multiples, placing greater emphasis on profitability, operational efficiency, and long-term sustainability.

Yet valuation methodologies alone rarely determine the final purchase price. Buyers use a number of qualitative measures to decide where a business sits within expected ranges. This is where compliance, governance, client profile, and operational strength become critical.

Paul Bruns, Compliance Director, Simplybiz

8 | The Adviser Online