This week I compared recruiting and M&A offers for several advisors. The headline numbers told one story. The modeling told another.
On paper, a few of the recruiting offers were eye-popping, as high as 450% all-in. But the devil is in the details. Every deal is presented differently, and the numbers rarely measure the same thing.
So we modeled each offer side by side over a 10-year horizon, accounting for every component: upfront cash, earnouts, growth payments, equity, payout and after-tax value.
The picture changed.
• The recruiting checks were forgivable loans, often vesting over a decade or more and taxed as ordinary income along the way.
• The M&A proceeds were purchase prices, largely eligible for capital gains treatment.
• Equity in a larger enterprise, which can grow faster than a single practice on its own, added meaningfully to total value.
• On an after-tax basis, the M&A path generally came out ahead.
But the thing that stayed with them wasn't on any offer.
In most recruiting deals, step back early and the unvested balance comes due. In year 6, that can be half the package. And many notes are back-loaded, so the balance can be even higher.
With M&A, what you've received is yours. No note to repay. Room for whatever the next decade brings: health, family, markets, a successor ready sooner than planned.
That's what no headline shows. The freedom to decide when, on your own terms.
Neither path is right for everyone. And decisions this size aren't simple. They deserve deep analysis and a seasoned advocate on your side, before you sign anything.
Put decades of Wealth Management M&A experience to work for you.