The Succession Arbitrage
How the Industry's Refusal to Plan Its Own Exits Created a Quiet Advantage for Positioned Buyers
There is a statistic circulating in the M&A research that should embarrass our entire profession, and almost nobody is acting on what it implies.
DeVoe and Company, which has tracked succession readiness among RIAs since 2019, reported in its most recent talent study that only 42 percent of firms have a written succession plan. That is the lowest reading since tracking began. Let the irony land fully: an industry whose core value proposition is planning, whose Advisors spend their days telling clients that hope is not a strategy, is operating majority-unplanned on the single largest financial event of its owners' lives. DeVoe's own report called out the contradiction directly, noting that a profession built on planning and risk mitigation is failing at both when the subject is itself.
This is not an awareness problem. In DeVoe's latest annual M&A outlook, 67 percent of RIA leaders named succession planning as a major issue, up from 62 percent the year before. They know. They read the same trade press you do. They attend the same conference sessions with "succession crisis" in the title. And still the written plans are not getting written, which tells you the obstacle is not information. It is math and emotion, tangled together.
Monday's briefing covered the buyer side of the record M&A market, where consolidators have migrated up-market and left the small end structurally underserved. Today is about the seller side of the same shift, because the two together create something that quietly exists to surface: a durable, legal, entirely honorable arbitrage available to Advisors willing to position for it years before a transaction exists.
The Affordability Collapse Nobody Reversed
Start with why the plans are not getting written, because the reason is the whole opportunity.
The traditional succession path was internal: develop a junior Advisor, sell them equity over time, retire on the proceeds while the practice continues under a name the clients already trust. That path is collapsing under the industry's own success. As David DeVoe told InvestmentNews, as recently as four years ago about 40 percent of Advisors said the next generation could afford to buy out the founders. In DeVoe's most recent outlook survey, that figure is 22 percent. Rising valuations, the very thing founders celebrate, have priced their own employees out of the building. DeVoe has described the result plainly: "The independent RIA segment is now in a succession crisis."
The confidence numbers underneath are just as stark. In DeVoe's talent research, only about one-third of firm leaders believe their next generation is ready to take over if a transition happened immediately, roughly a third have medium confidence, and a third have none at all. DeVoe's reporting attributes the decline in written plans partly to founders concluding that internal transition is unaffordable and simply giving up on planning altogether, defaulting to an eventual external sale.
The distribution of the planning gap matters as much as its size, because it tells you exactly where the opportunity concentrates. DeVoe's research found that firms above $1 billion in assets are twice as likely to have a succession plan in place as smaller firms. The planning deficit is not evenly spread across the industry; it is concentrated precisely in the founder-led, sub-billion practices that the consolidators are de-prioritizing. Meanwhile the same research found that only 8 percent of firms say they are not considering a plan at all, an all-time low, with roughly 30 percent intending to draft one and 20 percent having drafted but never implemented one. Translate that bureaucratic language into behavior:
the overwhelming majority of unplanned founders know they need to act, intend to act, and have not acted. They are not opposed to succession. They are stalled in front of it.
Hold those facts side by side. The majority of founder-led practices have no written plan. The internal path most of them would prefer is mathematically closed for roughly four in five. And the population is not resistant but stalled, waiting for a version of the decision that feels safe enough to make. The default outcome, by inaction rather than decision, is an external sale to whoever happens to be positioned when the founder finally decides, or when health decides for them.
Where the Mispricing Lives
Now add Monday's data back in. The best-capitalized external buyers, the PE-backed consolidators driving record deal counts, are concentrating on ever-larger targets, with the average seller now above $1 billion in assets and the sub-$500 million share of transactions shrinking. So the small founder-led practice faces a genuinely strange market: a record number of deals happening around them, an internal path they cannot afford, and a shrinking pool of institutional buyers interested in their size.
Let me be precise about what the arbitrage is and is not, because these under the rader, trades on honesty, not hype. There is no published dataset showing that positioned successors buy practices at a measurable discount, and you should distrust anyone who quotes you one. The advantage is structural rather than statistical, and it comes from three verifiable directions. First, fewer competing bidders at this practice size, per the deal composition data. Second, the seller's decision criteria: succession research consistently finds that founder decisions weigh continuity, client care, and legacy heavily alongside price, which favors a known, trusted counterparty over a stranger with a bigger check. Third, structure: a seller who trusts the buyer accepts more seller financing and longer earn-outs, terms that reduce the buyer's capital requirement and risk even when the headline price is full.
In other words, the mispriced asset is not the practice. It is the relationship.
The industry has created a large and growing population of founders who will eventually need an external successor, has simultaneously reduced the competition to become that successor, and has left the successor role essentially unclaimed in most local markets. Claiming it costs positioning and patience, not capital.
The Chairman’s Council publishes what the conference main stage won't — the structural gaps between how this industry talks and how it transacts. Upgrade to premium membership to read the positioning playbook below.
The Window Has a Clock
One more piece of context before the tactical material, because it explains the urgency and separates this from the evergreen succession content the industry recycles every year. This arbitrage is visible, and visible gaps attract infrastructure. DeVoe writes about the succession crisis every quarter. Custodians run succession matchmaking programs. Consolidators are beginning to build small-practice onboarding channels precisely because the supply of unplanned founders keeps growing. Structural gaps in markets this well-documented do not stay unclaimed forever; they get institutionalized. The Advisors who benefit will be those who established the relationships before the infrastructure arrived, which is a several-year head start available right now and shrinking.
What follows below the line is the playbook for claiming the successor position in your market: the continuity agreement approach that starts the relationship years before any sale, the specialist positioning that makes sellers come to you, the credibility requirement most would-be buyers skip, and the transition structures that consistently beat higher bids.
Below the line exclusive member content: Four positioning moves, in implementation order, including the single most underused entry point in succession deal making — become a premium member to continue.
Move One: Lead With Continuity, Not Acquisition
The most underused entry point in succession dealmaking is not an offer to buy. It is an offer to protect.
Every solo Advisor carries an unspoken operational risk: if they are suddenly incapacitated, their clients are stranded and their family inherits an asset that decays by the week. Regulators and custodians have pushed continuity planning for years, and many broker-dealers and RIA platforms now expect or require a named continuity partner. Yet enormous numbers of solo practitioners have either no continuity arrangement or a stale one naming an Advisor who has since retired themselves.
The move is to become that named partner. Approach the established solo Advisors in your market, particularly those fifteen or more years your senior, with a reciprocal continuity agreement: if something happens to either of you, the other steps in under pre-agreed terms to protect the clients. You are asking for nothing except mutual protection. There is no purchase, no valuation negotiation, no implied timeline, and the Advisor's attorney and custodian will generally applaud the prudence.
What you have actually done is install yourself as the pre-vetted successor. The continuity partner is the person the founder has already introduced to their processes, their staff, and in many arrangements their top clients. When the founder eventually decides to sell, on their timeline and with full agency, the question of who understands the practice and can protect the clients has an existing answer. This approach works precisely because it is genuine. The protection is real, the reciprocity is real, and if a sale never happens you have still exchanged real value. It is positioning that would look honorable printed on the front page, which is the only kind worth building.
Move Two: Become the Named Successor in Your Market, Publicly
Individual relationships scale slowly. Positioning scales faster. The second move is to make "succession solution" an explicit, public part of your practice identity: a page on your site describing your transition process and client-care philosophy, a relationship with your custodian's succession or M&A desk so you are on the list they consult when an Advisor asks about exit options, and a habit of speaking about transition planning at the local FPA chapter, study groups, and CPA societies where aging founders actually spend time.
The psychology this serves is well documented in succession research: selling founders are not purely price maximizers. Their hesitations cluster around client welfare, staff outcomes, and legacy, which is exactly why so many delay planning despite knowing better. A buyer who leads with a documented answer to those anxieties speaks to the actual decision criteria. When a founder can read, in your own published words, how their clients would be communicated with, which service commitments would be preserved, and how their name and staff would be treated, you have answered the questions that keep them from starting the conversation with anyone else.
Move Three: Build Your Own Plan First
Here is the credibility requirement most aspiring succession buyers skip, and it is disqualifying more often than they know. You cannot ask a founder to trust you with their life's work while your own practice has no written succession plan. Sophisticated sellers, and the attorneys and custodial consultants advising them, will ask. The 42 percent statistic means the odds say you fail that question today.
Writing your own plan does double duty. It makes you a member of the minority you are asking sellers to join, which changes the texture of every conversation from salesmanship to shared discipline. And DeVoe's research makes the direct economic point: the presence of a succession plan itself strengthens a firm's value and its standing with sophisticated counterparties, because it evidences management depth rather than key-person dependence. If you have a junior Advisor, this is also where the graduated pathway begins, with defined development stages and client relationship transfers that pace trust deliberately over one to two years rather than through abrupt handoffs. A practice that has executed internal relationship transitions has rehearsed the exact skill that acquired clients will need.
Move Four: Offer the Structure the Consolidators Won't
When a positioned relationship finally becomes a transaction, your decisive advantage is not price. It is shape. The institutional buyer's model generally needs the founder integrated, rebranded, and transitioned on the acquirer's timeline. Your independence lets you offer what many founders actually want: a graduated exit. A phased transfer over two to four years. The founder keeping an office, a title, and a role with their longest-tenured clients while ownership migrates on an agreed schedule. Client communications framed as an evolution of the practice rather than a sale of it.
Structure is also your financing strategy. Sellers who trust the successor routinely carry meaningful seller financing, which lowers your bank requirement, keeps the founder economically invested in a smooth transfer, and signals to lenders that the person who knows the book best believes in its transferability. The affordability crisis that closed the internal path for their junior staff is solvable for you precisely because a trusted external successor with a phased structure needs less capital at close than the headline valuation suggests.
The Honest Summary
Nothing in this playbook is a trick. It is the patient occupation of a role the industry has documented, lamented, and left vacant: the prepared successor. The founders are aging on a public clock, the internal path is closed for most of them by their own success, and the institutional buyers are busy elsewhere. Someone in your market will be the name that comes up when those founders finally make the call they have been postponing. The only question the data leaves open is whether it will be you.
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