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    • Successful

      The Future M&A Marketplace Flooded?

      Based upon the current maturity of many RIAs in our industry, the next 10 years will see the number of “Sellers” increasing steadily.

      Like any crowded marketplace, only the entities in great shape and ready to move will be in a position to command Fair Market Value, if not a PREMIUM. (Read about Wela’s approach to maintaining a large average revenue per client and attractive Cash Flow HERE.)

      Firms with less appealing client demographics will take longer to sell and may need to be aggressively discounted to get a deal done. Good Cash Flow will not make up for too many households that are woefully under a suitor’s desired investment minimum.


      Time is on Your Side

      There is time to transform a practice into one with a very high concentration of households that meet the desired size and profitability of the serious acquirer.

      A deliberate and disciplined “CLIENT ENHANCEMENT” plan can be executed either on your own or with the help of a strategic partner.

      WELA’S “PMP” offering can provide critical solutions for the future management of smaller investors.


      Hypothetical “Small Client” Transition to Wela

      • Firm has $430mm in AUM/290 Clients/Revenue of $2.8mm/ARPC of $9,655

      At first glance, average AUM per client of $1.48mm looks fairly attractive. But the $430mm is NOT comprised of 290 individual clients with $1.48mm portfolios each.

      Unfortunately, this hypothetical client base includes 115 investors with less than $500k. That’s 40% of relationships that account for $28mm in assets and which generate only $280k, or 10%, of firm revenue.

      Successfully transitioning out of 80% of these low-revenue clients WILL have a dramatic effect on this firm’s efficiencies, cost structure, average client profile and future growth trajectory.
      The resulting new firm metrics would look like this:  $404mm in AUM/198 Clients/Revenue of $2.54mm/ARPC of $12,828

      The ability to leverage the freed up resources to win additional HNW business will dictate the future enhanced value of their practice. Should they adopt a very disciplined approach to securing only HNW prospects that meet or exceed their new average client size of $1.95mm, resulting in the following financial transformation:  92 Low-Revenue clients replaced by 33 “Ideal Clients” resulting in new “Ideal Firm” metrics:  $482mm in AUM/228 Clients/Revenue of $3.31mm/ARPC of $14,517

      CLIENT ENHANCEMENT efforts deliver the following changes to key client metrics:
      • 37% increase in average client size;
      • 32% increase in average revenue per client;
      • 9% lift in firm AUM;
      • Low-Revenue clients decreased from 34% to only 10%


      5-Year Client Enhancement Breakdown

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