Plan to sell your firm? You’re not alone. Mergers and acquisitions (M&A) activity in wealth management continues its rapid pace. Echelon’S RIA M&A Second Quarter Deals Report reported the last quarter of 2024 and the first two quarters of 2025 saw over 100 deals announced each and a 36% increase in deal volume in 2025 over 2024. Inorganic growth is viewed as a powerful growth tool. Whether in three years or five years, many wealth management firms are building a business with the intent to sell.
Echelon’S RIA M&A Second Quarter Deals Report reported the last quarter of 2024 and the first two quarters of 2025 saw over 100 deals announced each and a 36% increase in deal volume in 2025 over 2024.
A firm’s valuation takes into account many factors, but a major factor is technology. In our experience helping private equity (PE) firms with due diligence, we most often see them ask:
- Do they own their own data?
- What is their advisor tech stack?
- Do they have centralized operations?
- Are they scalable?
Here’s where firms should invest their technology dollars before they go on the market in order to increase their valuation.
Where to Invest Your Technology Dollars
Private equity firms want to see that the firms they buy have technology that enables their ability to scale easily; that they own their own data; and have martech tools that drive organic growth.
- Tools that Enable Ability to Scale—using tools that allow you to operate with minimal headcount is a big driver of higher valuations. The consistency and stability of a streamlined workflow and the human resourcing needs behind it is a significant driver of a multiple. The PE firm wants to know they can add more clients or other firms without having to add a significant amount of resources to accommodate the acquisition.
- Owning Your Data—having a cloud infrastructure where custodial feeds go directly into a data warehouse with firm-level governance on top of it is essential. Position your firm to feed applications data versus the applications feeding you. PE firms look for firms that can implement new technology in a seamless way (when firms don’t own their data the implementation takes longer and causes significant advisor and client disruptions. In fact, some firms avoid technology enhancements because it’s hard to manage that level of change and still make the goals). Owning your data has other benefits as well. Firms that have mature data programs decrease switching cost of their fintech which drives optionality or leverage. Owning your own data drives real-time insights. Finally, data ownership is the lifeblood of AI and enables firms to benefit from the advancement in AI tech.
- Martech That Drives Organic Growth—PE firms want to buy firms that are growing. Technology can play a big role in driving organic growth. Leveraging martech tools internally can lower your dependence on custodian referral programs as well as strengthen your go-to-market and top of funnel business development strategies. Martech gives you the ability to feed your advisor teams with referrals. Firms with a better than average organic growth rate will see higher valuations.
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Variables to Consider
When developing a technology strategy that is designed to increase your valuation, there are a few key variables that impact your investment decisions: your time horizon, your end goal, and your organizational components.
- Time Horizon—do you have a one, five or even ten year plan? Knowing your time horizon informs your prioritization of the most meaningful tech projects. Think of it like a house that you are selling. Does it make sense to put on a new addition to put the for sale sign up?
- End goal from acquisition perspective—are you targeting $5 billion, 20 billion, or $50 billion? Your AUM goal can be used as the “light house” internally and drive the story to potential buyers.
- Organizational components—the basics matter. Defining a clear operational structure that first, establishes stable outcomes and second, showcases scale.
Carefully Craft Your Technology Strategy
Getting the most out of your firm’s technology investment when it comes to valuation requires a different approach to technology than traditional firm operations.
“All firms with the ambition to sell need to look at their tech stack with the knowledge that it will affect the firm valuation,” said Doug Fritz, F2 Co-founder and Executive Chairman. “For better or worse, the decisions they make now will show up when it comes time to sell.”
Planning technology and marketing strategies that enable scale, focus on data, and activate strong martech activity early in a firm’s lifecycle can lead to a stronger position to sell in the future.
Contact us for support in managing technology investments for M&A.
