Minority Stakes in Advisory Practices: Opportunity or Trap?

In this episode of Advisor Talk, Frank LaRosa and Stacey Frank break down the realities behind minority equity deals in advisory practices - including what advisors often misunderstand about control, exit clauses, valuation multiples, and long-term implications.

Frank explains why even a 10–20% minority stake effectively creates a partner in your business - whether you think of it that way or not - and why advisors must think beyond the upfront check and consider the unwind scenario before signing anything.

They also explain the difference between taking a transition loan versus selling equity - and why one is far easier to reverse if things don’t go as planned.

Key questions explored in this episode:

What does selling a minority stake actually mean for control?

Even at 10–20%, you now have a financial partner whose incentives may influence hiring, spending, technology, and growth strategy.

Is there usually an exit clause?

In many cases, especially with smaller RIAs, there may be little to no unwind option. Larger firms may offer buyback terms — but often at a higher multiple if you’ve grown.

Why are broker-dealers offering these deals now?

Firms are looking to accelerate growth beyond the industry’s typical 5% net new asset growth rate and to retain advisors long term.

If you’re a financial advisor considering selling 10–30% of your practice - or being approached with a “sell and stay” offer - this episode will help you think through the long-term consequences before you sign.

Chapters:

01:06 – Episode Intro

03:12 – Advisor Concerns

04:45 – Revenue vs Profit Share

06:02 – You Now Have a Partner

06:59 – Exit Clauses Explained

10:16 – Control & Fees

14:09 – Growth Expectations

18:25 – Why Firms Invest

25:28 – Don’t Decide on Money

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