Ritz Stevens Insights · Selling Your Practice
What Selling Your Practice Actually Involves
Most of what decides the outcome of a sale sits below the headline number. Client consent, the payout schedule, the tax allocation, and the terms nobody reads until the paperwork is already drafted.
What We Write About
The parts of a sale that decide what you actually take home
What Happens to Your Clients
Client relationships don’t transfer on a closing date. Federal law requires that every advisory agreement provide for client consent before it can be assigned, so selling your firm means every household you have gets asked in writing.
How the Purchase Price Gets Paid
A price is a stack of pieces. Cash at close, sometimes equity in the buyer’s firm, and an earnout paid over the following years against something. The pieces behave differently and only one of them is certain.
Earnouts and Retention Terms
The contingent share of a price is usually measured against retained revenue or retained assets. That makes your last dollars a bet on your own clients staying after you’ve stopped being the reason they do.
What the Sale Costs You in Tax
An asset sale splits the price across seven classes and both sides report the same split to the IRS. Goodwill and a covenant not to compete are taxed at different rates, and the buyer wants the allocation you don’t.
How Long It Takes
Diligence, client consent letters, custodian paperwork, and an earnout window that can run years past closing. Advisors plan for the closing date and get surprised by everything scheduled after it.
Knowing When It’s Time
Timing a sale around a number rarely works. The firms that sell well are the ones where the financials are clean and the client relationships already run through more than one person.
Why Advisors Talk to Us
We’ve sat on both sides of these conversations.
Ritz Stevens is run by former Schwab employees who’ve seen how these deals get put together. We’re not a buyer and we don’t take a cut of your deal. We help advisors see what their options actually are, what a buyer is really paying for, and which questions to ask before the terms are written down. It starts with a conversation about where you are rather than a valuation you didn’t ask for.
From the Library
Recent posts on selling a practice
- How Much Of Your Sale Price Actually Depends On Whether Your Clients StayThe multiple is the headline. What you take home is decided by how much of the price is contingent on your clients staying, and by how the price gets split for tax purposes. Here is what a seller is actually being offered.
Common Questions
Frequently Asked Questions
What happens to my clients when I sell my practice?
They get asked. Section 205 of the Investment Advisers Act requires advisory contracts to provide that they can’t be assigned without the client’s consent, and a sale assigns them. Clients receive notice and either sign or object. Most stay, and how many stay depends heavily on whether they already knew somebody at the firm besides you.
How is the sale of a financial advisory practice taxed?
It depends on how the price is allocated. In an asset sale the price gets split across seven asset classes on IRS Form 8594, filed by both the buyer and the seller. Gain on goodwill is capital gain. Payments for a covenant not to compete are ordinary income to the seller. If the price is paid over more than one tax year, installment sale rules apply unless you elect out of them. Talk to your own CPA before you sign the allocation, because it gets negotiated once.
What is an earnout, and how much of the price is contingent?
An earnout is the portion of the price paid after closing, conditional on the firm hitting something the buyer specifies, usually retained revenue or retained assets over two to three years. The share varies by buyer and by firm, and buyers have been leaning on it harder as valuation expectations flatten. Ask for the split before you respond to the headline number.
How long does it take to sell a practice?
Getting to a signed agreement is the short part. Diligence, client consent, repapering, and custodian transitions carry on after it, and an earnout window can run for years past the closing date. Plan for the sale as a multi-year process rather than an event on a calendar.
When is the right time to sell?
The market rewards firms with clean financials, documented recurring revenue, and client relationships that don’t run entirely through the owner. Those take twelve to thirty-six months to fix and they can’t be fixed once a buyer is already looking. The right time to start is before you want to sell.
Do I have to use a broker to sell my practice?
No. Some advisors use a transaction intermediary and pay a percentage, some sell to a buyer they already know, and some transition internally to a junior advisor. Each path has a different cost and a different timeline.
Does Ritz Stevens broker the sale or give tax advice?
No to both. We’re not a registered investment adviser, we don’t provide tax or legal advice, and we don’t take a percentage of a transaction. We help advisors understand their options and connect them with the right people. That’s the Next Destination℠ conversation.
Have a Question About Selling That We Haven’t Written About Yet?
Tell us what you’re working through. Twenty minutes, no valuation, no pitch. Bring the terms you’ve been given or bring nothing at all.
General information for financial advisors. Not individualized tax, legal, or investment advice. See our Disclosures.
Try It Yourself
A Starting Number, If You Want One
This is the same math a buyer would run on your firm, in your hands first. Adjust what applies to you below and watch the range move.
The practice valuation calculator has its own page, with the FAQ and a breakdown of what moves each number. What you enter here carries over to the other free tools, so you only type it once. None of it leaves your browser.
Tell Us About Your Practice
Drag to $500M+ for larger practices.
Used only to estimate annual recurring revenue from AUM — skip this and think in revenue terms if you prefer.
Staff, occupancy, technology, compliance — everything before owner comp and profit.
Commission, one-time planning fees, and trail-only revenue count against this.
How much of revenue sits with your top 10 households.
Net new assets and clients over the trailing 12–24 months.
Estimated Enterprise Value
$4.2M–$5.0M
Based on a 3.1x–3.7x multiple of an estimated $1.50M in annual recurring revenue.
How We Got This Number
This is an illustrative estimate, not a formal valuation or appraisal. Ritz Stevens is a trade name of RitzWerks and is not a registered investment adviser, broker-dealer, accounting, or law firm; nothing here is investment, tax, or legal advice. An actual practice value depends on a formal valuation engagement that reviews client contracts, custodial data, and firm financials directly.
Multiple range informed by CT Acquisitions’ 2026 RIA & Wealth Management M&A Multiples Report.