Financial advisory and real-estate brokerage franchises

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December 07, 2020

by a searcher from University of Pennsylvania - The Wharton School in Pittsburgh, PA, USA

At the HBS conference yesterday, Jim Sharpe mentioned seller-owned franchises as an emerging trend. We've seen this a lot in gyms, massage, fast food, b2c healthcare services, etc.

Has anyone here has focused on rollups within financial advisory / wealth management or in real estate brokerages? Would love to chat if so!

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Reply by a searcher
from IESE Business School in Los Angeles, CA, USA
The RIA/wealth management space is very interesting and I think will go through much consolidation in the future, as ~95+% of firms are small local firms of less than 10 people. However, most of the value is tied to the client relationship (so in effect tied to the financial advisors at the firm), it tend to be cyclical (particularly the AUM model if clients have a decent amount of equity holdings), and valuations were high when I looked at it. There's supposedly 50 buyers for every seller in this space, although I haven't verified that figure. Those reasons combined with my plan to use an SBA loan as core part of the capital stack didn't appeal to me. But I think there's lots of opportunities in the space if you finance it through a large earn-out and with less leverage (and SBA won't work if you use earnout).
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Reply by a searcher
in New York, NY, USA
Hi ^redacted‌ - You can access industry research reports from the "industries" icon up top. If you type key words like "franchise" or "gym" in the search bar, you'll find relevant reports. Feel free to message me if you have any questions!
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