“When you have that kind of deal flow, it does force you to become more selective. We’re not seeing busted auctions, to use a banking term. Everybody is still finding a home. But there are certain buyers that are taking a step back,” he said.

And as interest rates change and credit tightens, the more highly leveraged buyers might need a little time to adjust to those higher rates and work out just how much credit the lenders are willing to put on these businesses, he said.

Does that mean that advisors who have been thinking of selling but haven’t need to move quickly? Not at all, the panelists said. Especially if that advisor has a couple of more years before wanting to pull the trigger.

Sprucing Up For A Sale

As buyers have gained experience as integrators and might be slowing down acquisition rates, this is a good time for sellers to reflect on what it is they want out of a sale. There’s a “right” buyer for every seller, the panelists said, where the seller is looking to spend another 10 years growing the business or wants nothing more out of a deal than a financial transaction and a retirement party.

“More and more, buyers, even the ‘serial acquirers’ are probably very focused on that fit, in order to create better value. Aggregation for aggregation’s sake isn’t going to happen for much longer,” Bhattacharyya said. “So if you want to stay in and grow your business, don’t necessarily go for the highest dollar. Go with the party that will grow your business best. That’s the better deal.”

In Tibergien’s discussions with RIAs, he said he’s observed that many tend to compare themselves only to other RIAs, forgetting that there many other institutions—from the advisor’s custodian to the big wirehouse next door—that are all competing for the same type of client.

That question of differentiation is as vital today as ever, and Tibergien said the two most common areas where differentiation can take place are in targeting a niche and in developing technical expertise.

“If you’re going to be a niche-focused firm, it’s not enough to say we’re working with clients with $10 million. You have to look at what’s the source of their wealth, what’s the family structure, where are they in their life cycle, what are the characteristics of that individual, so you can create a community of clients,” he said. “An example of that would be business owners in transition, which is a great niche market. Or professional practitioners, like lawyers or accountants, or widows, or people going through a divorce, and so forth. But the idea is creating a community of clients.”

Technical expertise, he said, might be catering to people who have a philanthropic orientation, an interested in ESG, or who are in need estate planning.