Financial Advisor Practice Valuation Calculator | Broker-Dealer
Use our financial advisor practice valuation calculator for broker-dealers to get a quick valuation range. Enter AUM, gross revenue, % recurring revenue, and your payout rate to see what buyers may be willing to pay in today’s market.
How the Calculator Works
Multiple Approaches Used
This valuation calculator blends common approaches to practice value:
- Revenue/GDC Multiples: Anchored to trailing-12 gross revenue, adjusted for fee-based percentage and product mix.
- EBITDA Considerations: Because the calculator doesn’t directly collect EBITDA, the model may infer margin using payout rate and industry averages to contextualize cash‑flow–oriented valuation.
- Discounted Cash Flow (select cases): Where inputs support it, growth and margin assumptions inform intrinsic value for steady, recurring-revenue books.
- Broker-Dealer Adjustments
Broker-dealer practices behave differently than RIAs. The model includes adjustments for:
- Grid/Payout Effects: Net revenue realization materially impacts EBITDA and the multiple applied.
- Product/Commission Mix: Heavier commission dependency can compress multiples relative to fee-based revenue.
- Trails and Advisory Mix: Higher recurring revenue (advisory, trails) tends to increase defensibility and valuation.
- OSJ/Team Structure: Multi-advisor and OSJ platforms can lift value when there’s documented continuity and clean supervisory records.
- Transition Friction: Portability constraints, proprietary products, or restrictive agreements may reduce what buyers are willing to pay.
Data Normalization
To improve comparability, the calculator assumes standard add-backs (reasonable owner compensation, non-recurring expenses) and excludes one-time items that don’t carry forward.
Limits of an Online Tool
This is a ballpark estimate—useful for planning, not a fairness opinion. Actual sale prices reflect buyer-specific synergies, portability, deal structure, and diligence findings. For a defensible valuation, request a formal engagement and report.
Key Value Drivers for Broker-Dealer Practices
Recurring Revenue & Fee-Based Mix
A larger share of advisory/fee revenue typically pushes the multiple higher. Buyers pay for durable, recurring cash flows supported by documented client agreements and competitive pricing—strengthening overall practice value.
Client Demographics & Concentration
Age distribution matters. Books with a healthy pipeline of accumulators—and low dependence on the top 10 households—often earn better valuations. High concentration increases risk and can compress what the market is willing to pay for your book of business.
Growth Trends & Pipeline
Sustained 3-year revenue or AUM CAGR indicates momentum and future earnings potential. Show your lead sources, conversion rates, and wallet-share expansion to support a stronger multiple.
Operational Efficiency
EBITDA margin reflects operational discipline—staff leverage, standardized workflows, and a modern tech stack. Efficient practices with clean books and clear procedures are easier to transition and typically support higher business valuation multiples.
Compliance Record & Risk Profile
A clean supervisory and compliance history reduces risk and signals defensible practice quality. Repeated or material findings can lower multiples or invite holdbacks.
Transition Friction
Portability, platform compatibility, and product restrictions affect client retention assumptions. Low friction, supported by a thoughtful succession plan, increases buyer confidence and valuation.
Broker-Dealer vs. RIA Valuations: What’s the Difference?
1. GDC & Grid Effects
In BD models, payout grids influence net revenue and margin, which in turn affect EBITDA multiples. RIA valuations lean less on grids and more on fee-only retention assumptions.
2. Product/Commission Mix vs. Fee-Only
Commission-heavy books can face multiple compression versus fee-based models due to variability and perceived revenue durability. Demonstrating a credible path to increase advisory mix can improve your valuation range.
3. Portability & Buyer Pool Differences
Some BD products or platforms restrict portability. RIAs often migrate more cleanly across custodians, widening the buyer pool. On the BD side, highlighting portable revenue and transition support helps counter perceived friction.
4. Retention Packages & Notes
Outstanding forgivable loans and retention packages change net proceeds and can influence offers. Clarity on outstanding balances and terms will help buyers model an accurate price.
Considering the RIA path? Check out our Practice Valuation Calculator for RIAs to compare inputs, assumptions, and methodology after reviewing your BD estimate.
Get a Defensible Practice Valuation
What’s Included
- A comprehensive valuation report with normalized financials and market comps
- Risk and transition friction analysis, including client retention modeling
- Buyer profile fit and deal structure considerations
- Next-step roadmap to enhance the value before a sale or partner buyout
When to Engage
- Preparing to sell or merge
- Partner buy-in/buyout
- Bank financing or collateral support
- Estate, divorce, or dispute matters
- Strategic planning and succession plan milestones
Frequently Asked Questions
How do you value a broker-dealer book of business vs. an RIA?
Broker-dealer valuations often start with T12 GDC and EBITDA, adjusted for fee-based mix, payout grid, product dependency, and portability. RIA valuations typically emphasize recurring advisory revenue and EBITDA, with fewer grid-related adjustments.
Does T12 GDC or EBITDA matter more?
Both matter. GDC captures top-line potential; EBITDA better represents cash flow available to a buyer. A strong EBITDA margin and rising advisory mix usually increase the multiple applied.
How do forgivable-loan balances affect value and net proceeds?
Outstanding notes or retention packages can reduce net proceeds and alter deal structure. Buyers often factor remaining balances, vesting schedules, and portability when forming offers.
What client age mix will significantly impact valuation?
A book skewed to clients over 70 can lower projected growth and retention, which may compress the multiple. Balanced demographics and documented next-gen relationships support stronger valuations.
Can I use this estimate for an actual sale price?
Treat the online estimate as a ballpark range. A formal valuation and buyer outreach will refine the number based on due diligence, retention modeling, and market feedback.
How do compliance issues affect a buyer’s offer?
Material findings, regulatory trends, or supervisory gaps increase perceived risk and can lead to price discounts, holdbacks, or structure changes. Proactive remediation and documentation help.
What increases my valuation in the next 6–12 months?
Raise fee-based mix, reduce top-client concentration, document client processes, and improve EBITDA margin. Demonstrate consistent AUM and household growth and build a clear succession plan.
How accurate is this free business valuation calculator?
It provides an estimate based on industry averages and your inputs. Accuracy improves with quality data. Use a short review to contextualize current market conditions and buyer fit.