RIA valuations are the arithmetic of an advisory practice whose value sits in recurring revenue: the fees on assets under management that renew without a sale, the owner's salary added back, and a multiple that a buyer pays for the expectation that the clients stay. An RIA valuation done by the adviser before a consolidator's offer arrives is that recurring revenue and those discretionary earnings times the multiple the adviser was quoted, and an insurance book of business valuation is the same sum with renewal commissions in place of fees. This page works both on the hub's example, says what moves a buyer between multiples, and points at the free small business valuation tool on this site that does the sum from your own figures, with no account.
The RIA valuation calculator: recurring revenue, earnings and the multiple
An advisory practice reports revenue that is mostly recurring, the advisory fees on assets under management, and discretionary earnings that are the profit plus the owner adviser's salary, benefits and one-off costs added back; $180,000 on the hub's example. Buyers quote a multiple of either: a multiple of recurring revenue or a multiple of earnings, and the adviser enters whichever they were quoted. At 2.5 times $180,000 of discretionary earnings the value is $450,000; at a revenue multiple the tool works the same way from the revenue figure. The SEC's investment adviser pages are where the registration and Form ADV that a buyer will read are described; the arithmetic is the calculator's.
What moves an RIA between multiples, and why the hub publishes none
The client roster's age and concentration, the share of revenue that is recurring against commissions, the custodian and the technology, whether the adviser stays through a transition, and the size of the practice, each move a buyer's multiple, and the multiple is the adviser's own judgement of those facts, not a figure this hub publishes. The ria valuation calculator on this site shows the value at the multiple entered and at the multiples either side, so the range between the consolidator's offer and the adviser's own number is on the page before a signed opinion is bought. The report tool turns that into a range with a midpoint.
The insurance book of business valuation: renewals in place of fees
An insurance agency's book is valued on its renewal commissions, the revenue that renews each year without a new sale, and on the discretionary earnings those commissions leave after the agency's costs and the owner's salary is added back. The multiple is quoted on either, and the arithmetic is identical: $180,000 of discretionary earnings at 2.5 is $450,000. What moves the multiple is the carrier mix, the retention rate and whether the carriers' appointments transfer with the sale, which is the buyer's due-diligence question rather than the sum. The free small business valuation tool on this site works the book's value from the agency's own figures.
From the valuation to the record
An adviser or an agency owner values the practice more than once: when a consolidator writes, when a partner buys in, when the succession plan is dated. Each valuation is the same arithmetic on that date's revenue and earnings at that date's multiple, and the useful thing is to see what changed between them. The free tool does the sum with no account; the paid plan files each valuation against the practice and the date, branded and exported, so the next conversation starts from the last number rather than from memory. The Small Business Administration's guide to selling a business, linked below, covers the sale itself.
Questions people ask about ria valuations
How are RIA valuations worked?
Recurring revenue or discretionary earnings, the profit plus the owner adviser's salary and one-off costs added back, times the multiple you enter. On the hub's example $180,000 of discretionary earnings at 2.5 is $450,000; the calculator works a revenue multiple the same way.
What multiple do RIAs sell for?
The hub publishes none. The multiple is your judgement of the roster, the recurring share, the transition and the size, and the calculator shows the value at that multiple and at the ones either side.
How is an insurance book of business valued?
The same way, on renewal commissions and the discretionary earnings they leave, at the multiple you enter, with the carrier mix, retention and appointment transfer as the buyer's questions.