TRANSITION TALK

Key Successor Traits

Posted by FP Transitions on Oct 21, 2020 6:19:34 PM

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As an owner of a successful financial advisory business, you understand that the team you’ve built is vital to that success. Taking the next step and giving your top talent the opportunity to become owners can increase your growth and ensure that the business will continue to be successful–for generations to come.

Assembling this successor team and committing to a long-term partnership is an important and weighty decision. How will you know who will make a good partner? What traits and behaviors suggest that someone will make a successful owner? Much of that depends on your own values and priorities as the majority owner of your firm.

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Topics: Succession Planning, Next Generation, Sustainability, Building Your Team

Virtual Meetings : Navigating the Tools [Video]

Posted by FP Transitions on Oct 14, 2020 4:22:20 PM

Digital meetings with colleagues and clients are the “new normal” for business operations. There are many free and paid options for virtual meetings­, and each software platform has different capabilities in terms of customization, security options, and additional features. Each of these tools is designed to help you connect “face-to-face” in a digital world. 

We’ve put together the video guide below on navigating the basics of virtual meeting software and successfully connecting with your colleagues and clients. Learn about managing audio and video settings, screen sharing, virtual backgrounds and, of course, the importance of practice, practice, practice.

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Topics: Client Trust, Client Relationships, Business Operations

Benefits of Synthetic Equity for Next-Generation Professionals

Posted by Stuart Smith, JD on Sep 30, 2020 4:56:11 PM

Benefits of Synthetic Equity for Next-Generation Advisors

The term “synthetic equity” refers to a set of compensation tools that is commonly used to provide key employees some of the economic benefits of ownership without actual stock changing hands. While existing owners may benefit from synthetic equity by capitalizing on employee performance without relinquishing ownership, there are key benefits to next-generation advisors, too.

Reduced Financial Risk

One of the most beneficial aspects of synthetic equity for a next-generation advisor is that it does not require a financial investment in the firm. As a younger professional, you may already be juggling the financial obligations of a new family, a recent home purchase, or student loans, and you may not be interested in taking on the added burden of ownership buy-in–yet.

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Topics: Compensation, Succession Planning, Next Generation, Sustainability, Building Your Team

Remodeling Cash Flow [Article]

Posted by FP Transitions on Sep 10, 2020 10:23:33 AM

There are two ways to make money from a financial services business: wages and profit distributions. But, there are four ways to build wealth from the same model: 

  1. Wages (including bonuses)
  2. Profit distributions
  3. Equity income selling equity
  4. Equity value, or stock appreciation

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Topics: Compensation, Succession Planning, Enterprise Strength, Cash Flow, Sustainability

Process Overview: Selling Your Business on the Open Market

Posted by FP Transitions on Aug 19, 2020 9:12:05 PM

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Selling your business is a big decision. The good news is that demand is high and you have many options for structuring your exit. You also have many places to conduct your buyer search: reaching out to your professional and community networks, pursuing unmonitored listing bulletin boards, entertaining an unsolicited query on the table, or engaging in an open-market search. Most of these strategies result in having to navigate the process alone.

Buyers who have bought businesses before have the advantage of prior knowledge of the acquisition process, but as a seller, you often only get one shot at it. It’s important to understand what to expect. What follows is an overview of the process for selling your business through the FP Transitions Open Market.

PHASE ONE: Finding the Best Match

1. Establishing Value (vs. Price)

Business value and selling price can be two different numbers. A comprehensive and professional valuation will provide a fair foundation for your selling price that considers revenue, expenses, client demographics, geographical location, and much more.

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Topics: Selling Your Practice, Open Marketplace

Mid-Year Market Review [VIDEO]

Posted by FP Transitions on Aug 11, 2020 4:09:23 PM

Earlier this year, with the global pandemic raging and markets in decline, we promised our clients and the industry that we would continue to provide an inside look as to what was happening in the M&A market for financial advisory practices.

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Topics: Commentary, M&A, Buying & Selling, Transactions

Considering Key Staff During the Sale of Your Business

Posted by FP Transitions on Jul 30, 2020 1:25:00 PM

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It’s hard to keep secrets in a small office. The rooms are tight, the walls are thin, and it’s just a matter of time before everyone knows everyone else’s business. Even when an owner has quietly decided to sell their practice, they should assume that staff members will eventually find out (if they haven’t already). In our experience, it’s best that employees hear the news from someone they trust: the owner.

Prospective sellers are often reluctant to speak to staff members about their exit plans because they aren’t sure how the selling process will pan out and they don’t know how the staff will feel about the change. While it’s important to be sure of your decision before announcing your plan, looping your staff into the process can increase your success and can even help shape the structure of your sale.

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Topics: Selling Your Practice, Deal Structure, Buying & Selling, Building Your Team, "Buying, Selling, and Valuing Financial Practices"

Buyer Benefits of a Sell and Stay® Transaction

Posted by FP Transitions on Jul 22, 2020 10:59:00 AM

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The Sell and Stay® approach to selling a financial services business was developed by the professionals at FP Transitions to fulfill the preference of many sellers to gradually exit the business by giving up their ownership obligations while continuing to service clients and earn an income. This arrangement can be customized in a hundred different ways, but often entails an owner selling the majority–or all–of their ownership to a third-party buyer and remaining as an employee of the business for a set number of years (typically 3-5) before fully exiting.

Buyers who are open to this type of transaction not only access a larger acquisition pool, but can enjoy other unique advantages as well. You, of course, enjoy all the benefits of a traditional acquisition: immediate growth, available financing options, expansion into different areas and niches, and economies of scale. In addition, the acquisition can help you tackle some other areas of your long-term growth strategy through:

    • Client Continuity and Retention
    • Turn-key Practice / Office
    • Talent Acquisition
    • Reduced Training Costs
    • New Competencies and Service Offerings
    • Institutional Knowledge
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Topics: Acquisition, Deal Structure, Buying & Selling, Sell and Stay™

Don't Forget to Take a Vacation!

Posted by Kem Taylor on Jul 20, 2020 4:12:35 PM

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I recently checked in on a client and she mentioned that she had to remind her staff to take vacation. As a small business owner, she wears many hats including H.R. As she processed payroll week after week she noticed her staff wasn’t requesting PTO. Her immediate concern was that employees would lose their accrued time off if they didn’t use it. More importantly, time away from work is necessary to get rested and charge your batteries.

Admittedly, “going on vacation” in these times may just mean closing and locking the door to your home office or taking your laptop and files off of the dining room table and putting them away for a few days. However, depending on where you live, you may be able to go out and safely explore local parks and trails or even go camping.

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Topics: Culture, Sustainability

The Four Greatest Opportunities for Financial Advisors

Posted by FP Transitions on Jul 16, 2020 7:27:21 AM

Four Opportunities for Financial Advisors

Today’s Independent financial advisors face an endless array of challenges and opportunities. Identifying challenges before they arise is key for finding solutions and developing strategies for tackling the issues that present the greatest opportunities for improvement and growth.

The four biggest opportunities are:

  • Balancing Growth and Profitability
  • Recruiting and Retaining Talent
  • Creating Business Sustainability
  • Growth Through Mergers and Acquisitions

Balancing Growth and Profitability

Growth and profitability are inextricably linked and balancing the two within a single practice is the difference between building a one-generational practice and a multi-generational, sustainable enterprise.

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Topics: Compensation, Succession Planning, Acquisition, Business Growth, Mergers, Talent Recruitment, Sustainability, Enterprise

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