Investment Management

July 24, 2020

WHITEPAPER | Valuation of Independent Trust Companies

In this whitepaper we review the history of trust companies and how consolidation in the banking industry, changing consumer preferences, and favorable trust law changes have led to the proliferation of independent trust companies. We analyze the average trust company’s income statement and industry-wide trends, such as trust companies’ relative immunity to fee pressure. We consider valuation “rules-of-thumb,” and why they often fail to address the issues specific to a given firm. Finally, we consider the various valuation methodologies, including the use of discounted cash flow models and guideline public company analysis, and how the use of multiple valuation approaches can serve to generate tests of reasonableness against which the different indications can be evaluated.

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When Trust Becomes Infrastructure
When Trust Becomes Infrastructure

Why RIA Consolidation Is Moving Beyond AUM

RIA consolidation is evolving beyond asset accumulation toward acquiring strategic capabilities that deepen client relationships and improve long-term retention. Trust infrastructure illustrates how specialized services can help firms become more valuable, differentiated, and useful to complex clients.
The Distribution Trap
The Distribution Trap

Why Some RIAs Become Too Profitable for Their Own Good

Strong profitability can become a hidden risk when firms prioritize distributions over investments in talent, succession planning, and growth initiatives. Long-term enterprise value is often created by balancing current returns with sustained reinvestment in the capabilities that drive future success.
The Valuation Penalty for Market-Driven Growth
The Valuation Penalty for Market-Driven Growth
Market appreciation can make an RIA appear stronger, but valuation depends on the quality and durability of growth. Firms that can separate organic growth from market-driven gains are better positioned to support premium pricing and stronger deal terms.

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