Episode 27: Valuations - What is Your Practice Worth & How Will It Be Valued with Special Guest Kay Lynn Mayhue

<p>Episode 27: Valuations - What is Your Practice Worth &amp; How Will It Be Valued with Special Guest Kay Lynn Mayhue</p><p>Hosts: Allen Darby &amp; Jacqueline Martinez<br>Guest: Kay Lynn Mayhue, President at Merit Financial Advisors </p><p>Wealth management valuations are sitting near historic highs, but not every firm is valued the same. In this episode, Allen and Jaclyn break down where RIA valuations are today, what buyers are really paying for, and why deal structure matters just as much as the headline multiple.</p><p><strong>Current Wealth Management Valuations</strong></p><p>The market remains highly competitive, with pricing moving up over the last six months. Tune in to find out headline multiples</p><p><strong>Why the Headline Number Can Be Misleading</strong></p><p>The highest multiple is not always the cleanest offer. Buyers often separate the base business from future growth assumptions, which means a large headline offer may depend heavily on earn-outs, retention payments, or aggressive performance targets. Sellers need to understand what is guaranteed, what is contingent, and what has to happen after closing to receive the full value.</p><p><strong>What Buyers Are Scrutinizing</strong></p><p>Organic growth has become one of the most important value drivers in the market. Firms with strong net new asset growth, team depth, and a credible next generation of leadership are commanding more buyer attention. On the other hand, concentration risk, weak succession planning, or a lack of reinvestment in the business can create friction in diligence and impact structure.</p><p><strong>Profitability Is Not Always What It Seems</strong></p><p>Strong margins matter, but unusually high EBITDA margins can raise questions. Buyers may interpret extreme profitability as a sign that the firm has underinvested in technology, infrastructure, talent, or future growth. The best-positioned firms are not just profitable. They are scalable, durable, and built to keep growing after a transaction.</p><p><strong>Understanding Deal Structure</strong></p><p>Most transactions include a mix of cash, buyer equity, retention payments, and potential earn-outs. Closing payments often represent 60% to 80% of the base valuation, while additional consideration may depend on client retention or future growth. Employment agreements, restrictive covenants, non-competes, and non-solicits are also standard parts of the process.</p><p><strong>The Role of Team Depth and Succession</str