"We don't really believe in acquisitions," Francais says, adding that most future transactions are likely to be "fold-ins." He expects to do another transaction "when we feel we are one firm again." Although Francais says they are 75% to 80% of the way there, the "last 20% takes the longest" because of the education process.

Currently, Aspiriant has 120 employees, including 42 partners. As Francais sees it, there are two primary goals behind its desire to grow the business. The first is to create an environment where the client experience endures long after the founders have retired. The second goal is to generate the scale so that retiring partners can sell out at a higher multiple.

Whatever the actual price was, the Aspiriant-Deloitte transaction was the kind of major deal that required external capital. Aspiriant made sure to mention that Schwab Advisor Services was one of the lenders in its ADV.  Some, though not all, the terms of the loans were spelled out. For instance, the ADV mentions that Aspiriant agreed to retain Schwab as its custodian for at least $3.75 billion of its $7 billion or so in assets under management.

Going forward, Francais acknowledges that Aspiriant may seek capital from a variety of sources for future acquisitions. "I expect to because there are firms out there that are good firms that don't do succession planning," he says. "That should be expected with thousands of RIAs out there."

Obtaining financing from a vendor could prove to be the best, most cost-effective avenue for an RIA, but advisors also need to avoid potential conflicts of interest. Many custodians have long-established relationships with advisory firms and it clearly is in the custodians' own interest to help these firms grow. Furthermore, as the average age of advisors keeps rising, custodians don't want to lose assets, so they have additional incentives to facilitate deals among their clientele.

Advisors also have to be careful not to cross ethical lines. "We would not provide financing to an RIA if that was the only reason they selected Pershing as a custodian," says Pershing Advisor Solutions CEO Mark Tibergien. "The reason is because that would be 'tying,' which is a violation of banking rules. It also skates the edge of the fiduciary standard, since the purpose of the financing would not be to the benefit of the client."

That said, Pershing would consider financing an RIA transaction if the advisory business selected Pershing as a custodian because the advisor favored Pershing's value proposition "vis-a-vis our competitors," Tibergien adds. Needless to say, Pershing would also have to properly vet the transaction like any other loan and closely analyze the risk parameters and viability of the deal.

"Advisors seeking money for acquisitions need to be careful that their lender doesn't have more invested in the enterprise than they do, and that they have sufficient collateral to repay the loan if things go sour, and that the deal makes cash flow sense. Unfortunately, many who seek outside capital and request funding do so because none of the conditions exist," Tibergien warns.
Officials at Schwab won't talk about specific transactions, but they acknowledge they are interested in facilitating transactions. "Capital can be a challenge," says David DeVoe, managing director and head of M&A services at Schwab. "Schwab and others are looking to connect advisors with a variety of options."

Like Tibergien and DeVoe, Fidelity Investments' CEO of custodial services, Mike Durbin, acknowledged that Fidelity will finance certain transactions. Currently, TD Ameritrade Institutional refers advisors to Echelon Partners, an investment bank, but CEO Tom Bradley says the custodian will unveil its own acquisition finance program in the next few months. Since the firm is 45%-owned by Toronto-based TD Bank, it could be the best-positioned custodian to finance RIA transactions.

But experts in the M&A space say that financing is rarely a major deal-breaker.