Guides / Valuation

AUM vs revenue multiples: how advisor practices are valued

Canadian advisor books are priced three different ways: as a multiple of recurring revenue, as a percentage of assets under administration, and as a multiple of earnings. The same book can produce honest answers several million dollars apart depending on which denominator the buyer uses.

Key takeaways

• Multiple of recurring revenue is the default Canadian denominator. The defensible published open-market range is 1.8x to 3.5x, and Advisor Finance puts it at 2x to 3.5x of recurring revenue net of grid.
• Percent of AUA is the Canadian secondary rule of thumb at 1% to 2%. The one Canadian deal priced this way settled at 1.75% of AUM adjusted for retention, and it was an internal sale.
• Earnings multiples are used where a practice has real staff and overhead. US deals in our realized set closed at 5.70x, 7.45x and 9.7x earnings, and the Canadian rule of thumb is only 3x to 4x EBITDA.
• A multiple quoted without saying gross or net of grid payout is meaningless. On an 80% payout grid, 3x gross is the same dollar figure as 3.75x net of grid.
• One illustrative $149M AUA book runs from roughly $1.2M to $4.2M across the three methods. The spread is the reason to price a book on more than one denominator before negotiating.
• There is no Canadian transaction database to settle the disagreement, which Investment Executive states outright.

Canadian advisor practices are priced on one of three denominators: a multiple of recurring revenue, a percentage of assets under administration, or a multiple of earnings. Recurring revenue is the default. The defensible published open-market range is 1.8x to 3.5x, with Advisor Finance putting it at 2x to 3.5x of recurring revenue net of grid, and George Hartman of Market Logics quoting 2x to 4x of recurring revenue and, as an alternative, 1% to 2% of assets under administration in the same publication.

Those two rules of thumb do not produce the same answer on the same book, and neither agrees with an earnings multiple. That is not a flaw in anyone's arithmetic. Each denominator measures a different thing: the top line, the asset base, or what survives after the practice pays its own costs. A book with premium fees and no staff looks cheap on earnings and expensive on assets. A low-fee book carrying two assistants and a lease does the reverse.

So the practical question is not which method is correct. It is which method the person across the table is using, whether their multiple is struck on gross revenue or revenue net of grid, and how far apart the three answers land for your specific book. Below is the worked arithmetic on a single illustrative practice, run through all three, plus the reasoning for when each one is the right primary method.

The three denominators, and what each one actually measures

Multiple of recurring revenue

This is the Canadian working standard, and it is what the realized deals we can document were priced on. Two named Canadian buyers paid 3.25 times recurring revenue and three times recurring revenue respectively, both describing 2.5 times as the industry standard they had chosen to exceed. At the other end, a 20-household book with one client holding 20% of the assets sold for one year's revenue.

The reason revenue works as a denominator is that revenue is what transfers. A buyer is acquiring a cash-flow stream, and the durability of that stream is the whole question. Canadian data reported by FP Transitions found recurring revenue averaging 2.31x against 1.08x for non-recurring revenue, a range of 1.16x to 3.38x on the recurring side, per Advisor.ca. A dollar of fee-based revenue is worth roughly twice a dollar of transactional revenue, which is why "revenue multiple" without a revenue-mix breakdown is nearly as unhelpful as no multiple at all.

Percentage of assets under administration

Percent of AUA is popular for one reason: assets are the number every advisor can quote from memory. The Canadian rule of thumb is 1% to 2% per Investment Executive, and a separate rules-of-thumb bundle in the same publication cites 2% to 4% of AUM alongside 3x to 4x EBITDA and 2x to 3x trailing revenue, which tells you how loose these conventions are.

One Canadian deal in our realized set was actually struck this way. Mike Berton sold 45 client relationships, roughly $7.5M of AUM, to an associate in his own Assante branch at 1.75% of AUM adjusted for retention as of a fixed measurement date. Two features of that deal matter for anyone using it as a comparable. It was an internal sale to a branch associate, which normally sits at the low end of any range, so 1.75% reads as a mid-point rather than a ceiling. And the price was adjusted for retention, meaning the percentage was applied to assets that actually stayed.

Multiple of earnings or EBITDA

Earnings multiples price the business rather than the book. They are the right tool when a practice has staff, premises, technology spend and a management structure, because those costs are real and a revenue multiple is blind to them. The evidence here is mostly American, and should be read as a cross-check rather than a Canadian benchmark. Three deals in our realized set were priced on earnings rather than revenue: an Orlando Ameriprise practice at 5.70x earnings, with the eight solicited offers spanning 4.28x to 6.28x; an Oregon fee-only RIA at 7.45x earnings; and a Washington fee-only RIA listed at 2.9x revenue and 9.7x earnings that sold on the earnings multiple, 11% above listing. Succession Resource Group's aggregate for 171 closed deals in calendar 2025 was 3.27x recurring revenue and 9.98x EBITDA.

Canadian practitioner guidance is far more conservative: 3x to 4x EBITDA. The gap between 3x to 4x EBITDA in Canadian trade commentary and 9.98x EBITDA in a US brokered-deal dataset is enormous, and it is not a rounding difference. Those US figures come from a broker publishing its own deals, they cover larger firms, and the buyer pool includes consolidators and private equity that has no Canadian equivalent for a book this size. Applying US earnings multiples to a Canadian advisor book will overstate the answer badly.

Gross revenue or revenue net of grid payout

Before any multiple means anything, settle the denominator. A price of 3x on gross dealer revenue and a price of 3x on the advisor's revenue net of grid payout are different transactions, and this is the single most common source of confusion in Canadian negotiations. Advisor Finance's published range of 2x to 3.5x is stated net of grid. Other published Canadian ranges, including the 3x to 4x of gross recurring revenue quoted by one platform operator and the competing 1.5x to 2.5x view in the same Investment Executive article, are struck on gross.

The arithmetic is unforgiving. On a grid where the advisor keeps 80% of gross, 3.0x gross is the same dollar figure as 3.75x net of grid. On a 70% grid, 3.0x gross equals 4.29x net. A seller who hears "three times" and assumes net, and a buyer who means gross, are roughly 25% apart on price and do not know it yet. Put the definition in the first written exchange, alongside the trailing period being measured and which revenue lines count as recurring.

One book, three methods

Here is the arithmetic on a single illustrative practice. The book below is not a real transaction: it is built on the profile of the average Canadian brokerage advisor, which the Investment Executive Brokerage Report Card puts at $149.0M in AUM across 300 client households. Assume $1,200,000 of gross recurring revenue on those assets, a grid that pays the advisor 80%, so $960,000 net of grid, and $560,000 of normalized operating costs including staff, premises, technology and a market-rate salary for the owner's own advisory work. That leaves $400,000 of normalized earnings. Every input after the AUM and household count is an assumption, chosen to be plausible rather than typical.

Read the spread rather than the midpoint. Across methods the same book supports anything from $1.2M to $4.2M, a factor of three and a half, and every one of those figures is defensible against a published source. That is what makes practice valuation contested: a seller who anchors on 3.5x gross and a buyer who anchors on 3x EBITDA are not negotiating, they are using different units.

Two narrower comparisons inside the table are more useful than the extremes. The gross-versus-net rows differ by $480,000 at the low end and $840,000 at the high end on an identical multiple, which is the grid-definition problem in dollars. And the Canadian EBITDA row sits below every revenue-based row, which is what you would expect from a practice carrying $560,000 of costs against $960,000 of net-of-grid revenue. Fix the cost base and the earnings-based answer moves fastest.

Why percent of AUA is a poor primary method

Percent of AUA quietly assumes every book converts assets to revenue at the same rate. They do not. Two $149M books, one billing a blended 1.10% and the other a legacy 0.55% on a heavy mix of low-fee and held-away positions, produce roughly $1.64M and $820,000 of revenue respectively. At 1.5% of AUA both are priced at $2.235M. The first book is being bought at about 1.4x its revenue and the second at about 2.7x. Nothing in the AUA calculation notices.

The distortions compound. Product and load structure matter: a front-end-load portfolio has been described as worth roughly double a back-end or DSC portfolio, with fee-based comparable to front-end, per Insurance Portal. Household structure matters more: $50M spread across 2,000 clients "isn't worth much" while $50M across 50 to 60 households is "worth a lot", as one broker put it in Investment Executive. A percentage of assets sees none of that.

Use percent of AUA as a sanity check, not the primary method. It is genuinely useful for that: if your revenue-based answer implies 3.4% of AUA, something in the revenue figure or the multiple is wrong. It is also the honest method when revenue itself is in flux, which is part of why the Berton internal sale was struck on assets and then adjusted for retention.

Why earnings multiples favour books with operating leverage

An earnings multiple rewards a practice that converts revenue to profit efficiently and punishes one that does not. Two books at $1M of net-of-grid revenue, one running $400,000 of costs and one running $700,000, show $600,000 and $300,000 of earnings. At an identical 6x, the first is worth double the second despite identical revenue. A revenue multiple treats them as the same asset.

That cuts both ways for a seller. If you have built genuine capacity, an associate advisor, a service team, documented processes, the earnings view is the one that captures it, and it is the method a consolidator or a larger buying firm will reach for. If your practice is essentially you plus an assistant, a revenue multiple will usually flatter you, because a buyer folding the book into an existing platform will not inherit your cost structure anyway. Note also the awkward middle: much of a solo practice's reported profit is really unpaid owner compensation, so any earnings-based negotiation starts with a fight over the normalizing adjustment for the owner's own salary. That is exactly the adjustment in the illustration above, and moving it by $50,000 moves the 6x answer by $300,000.

What none of this evidence can settle

There is no arbiter. Investment Executive states plainly that there is no database or organized practice exchange in Canada in which past transactions can be used as references for valuation. Every distribution of realized multiples that does exist is American, and one Canadian marketplace operator has reported seeing a valuation report come in at 20 per cent of what the company actually transacts for.

Even the best-documented professional valuation is a range in practice. FP Transitions publishes its own scorecard: its certified valuations landed between 94% and 107% of the realized selling price across six years, on deals it brokered with full access to the books. Its pooled observed range of gross revenue multiples in that same study ran from 0.27x to 2.84x. Nobody working from a summary of your practice can do better than that, and BookVest does not claim to: our output is a calibrated estimate range, not an appraisal.

The practical discipline is to price your book on all three denominators before you talk to anyone, then argue for the one that reflects what you have actually built. You can run the recurring-revenue view in a few minutes with our free valuation estimate, read exactly which drivers move the number and by how much in the methodology, and if a real negotiation is close, a holding-level report works from your actual revenue and household data rather than a category. For the wider picture on where realized multiples have actually landed, see our guide on what multiple advisor books sell for.

Common questions

Is a book of business valued on AUM or on revenue?

In Canada the working default is a multiple of recurring revenue, with percent of assets under administration used as a cross-check. Percent of AUA is convenient because assets are the one number every advisor knows, but it ignores the fee schedule that turns those assets into revenue. Earnings multiples are used mainly where the practice has staff, premises and genuine overhead.

Does a revenue multiple mean gross revenue or revenue after my grid payout?

Both are used, and the difference is large. On a grid where the advisor keeps 80% of gross, a price of 3x gross revenue equals 3.75x revenue net of grid, so quoting a bare multiple without the denominator is the most common source of confusion in Canadian negotiations. Settle the definition in writing before you discuss the number.

What percentage of AUM do advisor books sell for in Canada?

The published Canadian rule of thumb is 1% to 2% of assets under administration, attributed to George Hartman of Market Logics in Investment Executive. The only Canadian deal we have found that was actually priced this way closed at 1.75% of AUM adjusted for retention, and it was a sale to an associate in the same branch, which normally sits at the low end of any range.

Why do two valuations of the same book differ so much?

Because they are measuring different things. A revenue multiple prices the top line, a percent of AUA prices the asset base, and an earnings multiple prices what is left after the practice pays its own costs. A book with high fees and low overhead looks expensive on AUA and cheap on earnings, and a low-fee book with heavy staff costs does the reverse. Neither valuation is dishonest, and both should be run.