Corporate Valuation, Investment Management

January 4, 2016

Asset Manager and Mutual Fund Valuations Continue their Decline through Year-end

A quick look at year-end pricing of publicly traded asset managers reveals a continued skid in multiples for traditional RIAs and mutual funds with modest advancement for the alternative managers and trust banks.

historical median price ltm esp sector Earnings multiples are essentially a function of risk and growth, so a decline in cap factors for the traditional managers and mutual funds means one of two things must be happening: either the cost of capital is increasing or the growth outlook for asset managers is stalling. Despite the Fed’s recent actions, WACC’s are generally declining in most industries. There is no reason to assume the cost of capital is now higher in asset management than a year or two ago, so the trend in multiples suggests that the growth outlook for RIA earnings continues to be revised downward. Given that traditional asset managers and mutual funds are so highly levered to market conditions, some consider RIA valuations as a de facto futures contract on the broader indices. If that’s the case, a continued contraction in multiples could portend a pullback or lack of upside for the stock market in general. The market activity on the first trading day of this year tends to confirm this suspicion. Since most of the group is currently trading at a 30% discount to their 52 week high, the market is clearly bearish on the prospects for many of these businesses moving into the new year. Meanwhile, more optimistic investors will view this as a buying opportunity for companies that have gotten a lot cheaper in recent months. RIA multiples table 20151231

Mercer Capital's RIA Valuation Insights Blog

The RIA Valuation Insights Blog presents a weekly update on issues important to the Asset Management Industry.

Continue Reading

The Cost of Staying Independent
The Cost of Staying Independent

Sometimes Doing Nothing Is the Riskiest Choice

Remaining independent requires RIA owners to invest in future leaders, fund an ownership transition, and share authority. Delaying those commitments can increase risks for founders, employees, and clients, even when the business continues to perform well.
RIA Valuation Insights Blog Investment Management
Read Now about The Cost of Staying Independent
Skeletons in the Data Room: What Can Haunt an RIA Sale
Skeletons in the Data Room: What Can Haunt an RIA Sale
Client concentration, an aging client base, weak organic growth, founder dependence, and questionable earnings adjustments can complicate an RIA sale. Identifying and addressing these issues before due diligence helps owners protect transaction value and negotiate from a stronger position.
RIA Valuation Insights Blog Investment Management
Read Now about Skeletons in the Data Room: What Can Haunt an RIA Sale
Alternative Asset Managers Face a Reset in Public Market Valuations
Alternative Asset Managers Face a Reset in Public Market Valuations
Alternative asset managers experienced a significant contraction in public-market valuation multiples through September 2026 despite continued growth in assets under management and revenue. The divergence between operating growth and market performance highlights the importance of profitability, recurring revenue, and firm-specific fundamentals when assessing asset management businesses.

Cart

Your cart is empty