Methodology
Every figure, and what it rests on.
The engine is deterministic: the same inputs always return the same figures. Every method shows its formula and inputs, each saved run records the engine version that produced it, and no AI layer computes, adjusts or rounds a figure.
Seven methods
01
Revenue Multiple
Top-line multiple. Supplied by the published index (size-tier midpoint); adjustable in the workbench.
- Formula, as the report shows it
- $2.37M × 2.75×
- Inputs
- Trailing 12-month revenue (Billing / fee-billing system or accounting ledger)
- When an input is missing
- The multiple defaults to the published size-tier index: the midpoint on the sell lane, the index low on the buy lane. A supplied multiple wins.
- When it drops out
- On the sell lane, no revenue returns zero and carries no weight. On the buy lane, missing revenue is derived as screening revenue from filed AUM and client count, using published revenue per client. A target ruled non-retail is not screened; target-provided revenue is required before a ceiling.
02
EBITDA Multiple
Profitability-based. Defaults to the published index midpoint for firms this size; sensitive to how owner comp is normalized.
- Formula, as the report shows it
- $616K × 5.25×
- Inputs
- EBITDA (Accounting ledger (P&L))
- When an input is missing
- The multiple defaults to the published size-tier index: the midpoint on the sell lane, the index low on the buy lane. A supplied multiple wins.
- When it drops out
- No EBITDA: the method returns zero and carries no weight.
03
EBOC Multiple
Earnings before owner comp — neutralizes owner pay policy. No published EBOC index exists, so this multiple is an engine placeholder and the method carries less weight.
- Formula, as the report shows it
- $1.07M × 4.20×
- Inputs
- Earnings before owner compensation (Accounting ledger plus owner payroll detail)
- When an input is missing
- No published EBOC index exists, so the multiple is an engine placeholder (4.20×) unless one is supplied, and the method carries less confidence.
- When it drops out
- No EBOC: the method returns zero and carries no weight.
04
Discounted Cash Flow
Most theoretically sound, most assumption-sensitive.
- Formula, as the report shows it
- 5-yr FCF @ 5.2% growth, 14% discount, 3% terminal
- Inputs
- Free cash flow (DCF base year) (Accounting ledger); Expected annual growth (Portfolio accounting net-new-asset history)
- When an input is missing
- Missing growth, discount or terminal-growth rates run on the engine defaults, and the run says which.
- When it drops out
- Cash flow missing or not positive: the method is excluded and the run is provisional.
05
Client Value
Relationship-count proxy. Useful sanity check on small books.
- Formula, as the report shows it
- 168 clients × $39K
- Inputs
- Client households (CRM); Value per client relationship (OPTIONAL — the server derives it: revenue / households capitalized at the practice's revenue multiple, falling back to the study's AUM-tier median revenue per client. Only send a figure if the user has their own.)
- When an input is missing
- Value per client is supplied, or derived from the firm's own revenue per household, or from the published median revenue per client for its AUM tier, capitalized at the revenue multiple.
- When it drops out
- No households: the method returns zero. A buy target with no revenue may use screening revenue derived from filed AUM and client count using published revenue per client. Targets ruled non-retail are not screened: Client Value resting on the retail median is excluded.
06
AUM Percentage
AUM percentage 1.55% = midpoint of the published mid-size range 1.40%–1.70% of AUM (Sica Fletcher, RIA Valuation Multiples (SCF Index) (2024)). Adjusted by the six-factor quality multiplier.
- Formula, as the report shows it
- $312.40M × 1.55% × 1.24× quality
- Inputs
- Assets under management (Portfolio accounting / custodian data)
- When an input is missing
- The rate defaults to the midpoint of the published AUM-percentage range for the practice's AUM tier; the engine constant (1.50%) applies only when no published tier does, and lowers the method's confidence.
- When it drops out
- No AUM: the method returns zero and carries no weight.
Adjusted by the quality multiplier.
07
Comparable Transactions
Low end of the published revenue-multiple range for firms this size, adjusted by the quality multiplier.
- Formula, as the report shows it
- $2.37M × 2.50× × 1.24× quality
- Inputs
- Trailing 12-month revenue (Billing / fee-billing system or accounting ledger)
- When an input is missing
- The multiple is the low end of the published revenue-multiple range for firms this size.
- When it drops out
- On the sell lane, no revenue returns zero and carries no weight. On the buy lane, missing revenue is derived as screening revenue from filed AUM and client count, using published revenue per client. A target ruled non-retail is not screened; target-provided revenue is required before a ceiling.
Adjusted by the quality multiplier.
Formulas shown with the fictional sample practice's inputs from the worked example below.
From seven methods to one range
Seven methods, one practice
Fictional sample practice · sell laneRevenue Multiple
confidence 92
EBITDA Multiple
confidence 84
EBOC Multiple
confidence 60
Discounted Cash Flow
confidence 62
Client Value
confidence 58
AUM Percentage
confidence 88
Comparable Transactions
confidence 74
Which side of the table
Seller lane: the asking price sits above the fair estimate.
Free cash flow
With free cash flow on file, discounted cash flow takes part in the blend.
Range $3.23M – $7.36M. Every position is recomputed by the engine for the choice you make; nothing on this chart is typed in.
Weighting
- Confidence (default). Each method is weighted by its own data-confidence score, so a method resting on a placeholder counts for less.
- Balanced. Fixed weights: Revenue 20 · EBITDA 20 · EBOC 15 · DCF 15 · Client 10 · AUM % 10 · Comps 10.
- Custom. Weights you set; a Network valuation policy applies its weights this way.
Fair estimate, low and high
Only methods with a value above zero and a weight above zero take part. The fair estimate is their weighted average; low and high are the lowest and highest of those method values.
Sellers: the suggested asking price is the fair estimate plus 10%. Buyers: the walk-away ceiling is the fair estimate itself, with no premium — the most the economics support, not an offer.
The quality multiplier
Six factors, each scored 0–100. Raw metrics become scores by straight-line interpolation between two fixed anchors, clamped to 0–100; a factor with several metrics takes their weighted mean. A factor with nothing on file sits at a neutral 50. The weighted score maps onto a multiplier from 0.50× to 1.50×, where a neutral book is 1.00×. It touches AUM Percentage and Comparable Transactions only.
Recurring revenue mix
25%Share of revenue from advisory fees vs. one-time commissions
- Share of revenue that is recurring advisory fees: 60% → 0, 100% → 100
Organic growth
15%Net new asset growth excluding market appreciation
- Net new asset growth excluding market appreciation: -5% → 0, 10% → 100
Client retention
20%Annual household retention rate
- Annual household retention rate: 85% → 0, 100% → 100
Client demographics
15%Blends average household age with the asset-weighted decumulator share
- Average client age by household (lower scores higher): 70 → 0, 45 → 100
- Share of AUM held by decumulating households (lower scores higher — asset-weighted view a single average cannot express): 85% → 0, 25% → 100
Concentration (inverted)
15%Higher score = revenue spread across many households
- Share of revenue from the top 10 households (lower scores higher): 50% → 0, 10% → 100
Advisor longevity / continuity
10%Succession readiness first (successor, written plan, buy-sell, key-person risk), tenure second
- Average advisor tenure / experience depth: 2 → 0, 20 → 100
- A named internal successor (G2 advisor) is in place: false → 0, true → 100
- A written, current succession plan exists: false → 0, true → 100
- A funded buy-sell agreement is in force: false → 0, true → 100
- Share of client relationships owned personally by the departing principal (lower scores higher — key-person risk): 95% → 0, 25% → 100
- Years until the principal intends to retire (more runway scores higher): 0 → 0, 10 → 100
Data confidence
Data confidence is the weighted share of the input checklist that carries real data. Each missing field costs its weight and names the methods it drives and where it is typically found. A run is provisional when confidence is below 100%, when sources conflict, or when the DCF cannot run. A figure filled from a published median or an analyst assumption is recorded with its citation, and every method it drives is flagged as provisional.
| Input | Drives | Weight |
|---|---|---|
| Trailing 12-month revenue | Revenue Multiple, Comparable Transactions | 3 |
| EBITDA | EBITDA Multiple | 3 |
| Earnings before owner compensation | EBOC Multiple | 2 |
| Assets under management | AUM Percentage | 3 |
| Client households | Client Value | 2 |
| Free cash flow (DCF base year) | Discounted Cash Flow | 2 |
| Expected annual growth | Discounted Cash Flow | 1 |
| Value per client relationship | Client Value | 1 |
| Recurring revenue mix score (0-100) | Quality multiplier | 2 |
| Organic growth score (0-100) | Quality multiplier | 1 |
| Client retention score (0-100) | Quality multiplier | 2 |
| Client demographics score (0-100) | Quality multiplier | 1 |
| Revenue concentration score (0-100, higher = well spread) | Quality multiplier | 1 |
| Advisor longevity / continuity score (0-100) | Quality multiplier | 1 |
Benchmarks and versions
Transaction multiples
Sica Fletcher, RIA Valuation Multiples (SCF Index)
Sica Fletcher SCF Index (2024), verified Nov 2, 2026 · index version 2
| Tier | Revenue | EBITDA | AUM % |
|---|---|---|---|
| small | 2.5–3.0× | 4.8–5.7× | 0.9–1.3% |
| mid | 2.8–3.4× | 5.7–6.8× | 1.4–1.7% |
| large | 3.2–4.0× | 7.0–8.1× | 1.9–2.3% |
Within each tier, niche/specialist RIAs sit at the top of the range and retirement-plan advisors at the bottom.
Percentiles and medians
Firm size and client-mix percentiles: U.S. SEC, Investment Adviser Public Disclosure (IAPD) Form ADV compilation feed, 2026-08-12 feed.
Revenue per client, operating margin, productivity and attrition: InvestmentNews 2025 Advisor Benchmarking Study (Advisory Compensation & Staffing; Pricing & Profitability), InvestmentNews Research (KM Business Information US) — 2024 data, a self-reported survey rather than a census.
Evidence only, never in the valuation
- Stated fees: Form ADV Part 2A brochure via advmcp.ai.
- Form 5500 Schedule C: U.S. Department of Labor Form 5500 filings via 5500mcp.ai, refreshed 2026-09-02.
- Form 13F holdings: 2026-06-30 reporting period, filings through 2026-08-31.
None of these changes the valuation, coverage or confidence.
Engine version 1.8.0. Every saved run records the engine version and the index version that produced it, so any run can be reproduced later.
A worked example
Karnell Wealth is a fictional practice. Every figure below is the engine's output for its inputs, with confidence weighting.
| Method | Formula and inputs | Weight | Value |
|---|---|---|---|
| Revenue Multiple | $2.37M × 2.75× | 92 | $6.51M |
| EBITDA Multiple | $616K × 5.25× | 84 | $3.23M |
| EBOC Multiple | $1.07M × 4.20× | 60 | $4.48M |
| Discounted Cash Flow | 5-yr FCF @ 5.2% growth, 14% discount, 3% terminal | 62 | $5.57M |
| Client Value | 168 clients × $39K | 58 | $6.51M |
| AUM Percentage | $312.40M × 1.55% × 1.24× quality | 88 | $6.02M |
| Comparable Transactions | $2.37M × 2.50× × 1.24× quality | 74 | $7.36M |
| Quality multiplier | 1.24× | ||
| Fair estimate | $5.67M | ||
| Range (low–high) | $3.23M–$7.36M | ||
| Suggested asking price (+10%) | $6.23M | ||
| Walk-away ceiling, same practice on the buy lane | $5.45M | ||
| Data confidence | 100% | ||
Ask for the why
Ask your assistant to “Explain my valuation”. The valuation consultant explains what the asking price, range, coverage and methods mean in plain words, citing the engine's figures verbatim.
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