RIA / Wealth-Management Practice Acquisition & SBA Underwriting Financial Model

Description
The broker prices a retiring advisor's book at 2.2x recurring revenue. The bank prices the cash flow at about 6x. This lender-ready model shows you the gap - before you overpay roughly $2,000,000.

A $200M book at a 0.95% blended fee looks like a $4.18M asset on a revenue multiple. Underwritten as an SBA 7(a) acquisition - after a real advisor to replace the owner's production, after the market can move AUM-linked fees, after transition-year attrition - it pencils at $2.19M (6.0x Adjusted EBITDA). That gap is the whole game, and this is the model a solo or junior buyer, or an aggregator add-on, hands the lender.

The engine. Recurring advisory revenue is built bottom-up: beginning AUM rolled forward by market appreciation and net client flows, times a graduated blended fee, split into recurring fee, planning retainers and any transactional income (recurring share 92%). A retention and transition roll-forward models the biggest risk in a wealth-book sale: clients who leave when the selling advisor exits - 90 to 95% retained if the transition is handled, materially less on a botched custodian switch - with an earnout to a 95%-at-month-24 benchmark.

What a revenue multiple hides - priced here. Two prices side by side: the revenue-multiple price ($4.18M) next to the cash-flow price ($2.19M), each with its DSCR. The owner-advisor replacement: the seller usually holds the top relationships and produces a large share of the book; replacing that production (about $275k) is deducted to reach Adjusted EBITDA. The true DSCR (1.40x) printed next to the naive DSCR (2.52x) the broker sheet implies. A market-drawdown down-case: because fees are AUM-linked, a 20% drawdown plus transition attrition drives DSCR to 0.80x, below the 1.25x floor - the operating leverage an operating business does not carry. Plus a recurring-versus-transactional re-rate and a client-age and decumulation flag.

Financing, honestly. An SBA 7(a) capital stack - your equity, a seller note with a full-standby versus amortizing toggle as a DSCR lever, and a loan sized to DSCR, not LTV, because a wealth book is goodwill and collateral-light. Leverage lands near 66%. Three practice profiles (Transactional and Hybrid-Heavy 5.0x, Balanced Fee-Based 6.0x, Fee-Only Recurring-Forward 7.0x) reload the recurring share, multiple and working capital in one toggle.

Inside: an 11-sheet Excel workbook (Google Sheets compatible, no macros), a 24-page PDF guide, recurring-fee coverage, debt yield, cash-on-cash and a 5-year multiple (leverage-amplified, flagged; no live IRR by design). SDE (~31%) and Adjusted EBITDA (~18%) are realistic. Educational planning tool - not investment or financial advice.