Partner Letter, Q3 2026: What We Look For and Why We Say No
Here is what the firms we pass on have in common, and what it says about where this market is going.
We pass on most of the firms we look at. Writing about that feels like an odd thing for a buyer to do, so here is why: the firms we do not buy tell you more about how we underwrite than the ones we do.
Most of them had the same problem. Revenue that lived entirely in the founder. Not concentrated, not top-heavy, entirely: the founder held every meaningful relationship, priced every engagement, and was the reason clients stayed. That is a wonderful career and a hard thing to buy, because the moment the founder stops, most of what we paid for stops with him. We can help a firm fix that, but we cannot pay for it as if it were already fixed.
Some were auctions by the time we saw them, with a banker, a deadline, and four bidders. We are not built to win those and we do not pretend otherwise. If price is the only criterion, a buyer underwriting an exit will beat us, and they should.
A few we walked away from on compliance history. Not fraud, nothing dramatic. Patterns in the file that would have taken years to unwind and would have sat on our record for years. Long-term ownership means long-term responsibility for whatever we take on.
The market context has not changed much. Deal volume set another record in 2025, and the DeVoe survey at year-end found 54% of RIA leaders expecting volume to rise again over the following twelve months.[1] More buyers, more capital, more email in your inbox. None of that changes what makes a firm worth holding for thirty years.
What I would say to any founder reading this: the reason we pass is almost never the price. It is whether the firm still works when the founder does not. If you are five years out, that is the thing to spend the next two years on, whether you ever sell to us or not.
The Kovrent partners