TRANSITION TALK

Is Mediation For Your Deal a Good Investment?

Posted by Christine Sjölin on Aug 5, 2019 12:51:09 PM

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Acquisition strategies are varied and diverse; how an advisor or a firm pursues acquisitions will depend on their business model and philosophy. While the approach to acquisition should be personalized, it is a mistake to do it alone. In addition to the successful transactions presented in this report, FP Transitions works with many advisors who have endured failed sales or stalled deals.

The story of a failed transaction often begins with one or both parties hesitating to hire a mediator, the perception being that their deal is “simple,” and that buyer and seller can save money if they do it themselves. The information we gather from these clients about their failed sales gives our consultants broader perspective on what works and what doesn’t in an evolving marketplace. When we combine this information with the data gathered from successful deals, it is clear that investing in a mediator improves results for both buyers and sellers in terms of success rate, speed, and value.

One misconception advisors often share with us is the belief that one-on-one negotiations are easier and brokers will just get in the way of a personal connection between buyer and seller. This perception is understandable, as it is essential that buyer and seller have a mutual affinity and have aligned interests in order to transfer and retain client relationships after the deal is done. However, mutual affinity is not sufficient to get buyer and seller over basic negotiating factors, such as valuation, deal structuring, and tax allocation of the purchase price. These are complex topics where a mediator can provide expertise and perspective to both sides and advance the deal forward.

Financial services is such a regulated industry, with the added complexity of requiring a long transition, that it is common for a sale to get bogged down in “paperwork.” So, while each party does need representation, there also needs to be a knowledgeable and neutral mediator who can be responsible for keeping everyone on track, offer solutions, and has data to show why one side’s objection is or is not valid.

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Topics: Selling Your Practice, Acquisition, Buying & Selling, Trends in Transactions Study, Transactions

SOLD : July 2019

Posted by FP Transitions on Aug 2, 2019 8:00:00 AM

FP Transitions is pleased to announce the sales of financial services businesses in the following areas during the month of July:

  • Seattle, WA  |  $780,000
  • Central Coast New Jersey  |  $630,000
  • Fresno Area California  |  undisclosed
  • Kansas City Area Missouri  |  $1,300,000
  • Southern Illinois  |  undisclosed
  • Portsmouth, RI  |  $2,450,000
  • Orange County California  |  $260,000
  • Philadelphia Area Pennsylvania  |  $460,000
  • Central Colorado  |  $880,000
  • Upstate New York  |  undisclosed
  • Philadelphia Area Pennsylvania  |  $1,770,000

VIEW CURRENT LISTINGS HERE 

VIEW COMPLETE LIST OF PRACTICES SOLD 

LIST YOUR PRACTICE WITH FP TRANSITIONS

Sold announcements include all closed third-party transactions facilitated by FP Transitions, including private listings, pre-arranged matches, and those listed on the open market. 

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Topics: Selling Your Practice, Acquisition, Buying & Selling, SOLD

NEW Webcast - Advanced Strategies for Growth & Profitability

Posted by FP Transitions on Jul 24, 2019 10:00:00 AM

The growth and profitability of your business are interconnected. Top-line revenue growth is essential, but it is no good without bottom-line profitability.

Balancing growth and profitability comes down to compensation structure and the equity pathways created for owners of the business. The profits generated through properly structured equity pathways are a catalyst for growth and the means to accomplish long-term strategic objectives including recruiting new talent, internal succession, and acquisition.

In our newest webcast, VP of Research and Analysis Eric Leeper, CFA®, discusses compensation solutions for businesses in varying stages of growth and how these strategies can boost both top-line growth and bottom-line profitability. 

View webcast clip below and click here to watch the full video.

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Topics: Compensation, Succession Planning, Equity Pathways, Enterprise

Accessing the Next Stages of Growth

Posted by Kem Taylor on Jul 17, 2019 11:02:25 AM

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Over the last ten years, increasing numbers of advisors have begun the process of creating sustainable businesses. Many advisors started out as a book or a practice—one-generational models. They took steps to create much more valuable, multi-generational businesses by focusing on enterprise strength and setting up or restructuring essential business structures.

The M&A marketplace is becoming increasingly competitive. Businesses need a strong value proposition to step away from the crowd. Owners who have taken steps to work on building their enterprises are in the best position to leverage their unique business aspects to access more growth opportunities and become successful acquirers or merger partners. 

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Topics: Succession Planning, Multi-Generational Ownership, Organizational Structure, Business Growth, M&A, Sustainability

SOLD : June 2019

Posted by FP Transitions on Jul 2, 2019 10:41:07 AM

FP Transitions is pleased to announce the sales of financial services businesses in the following areas during the month of June:

  • Northern New Jersey | $395,000

  • Colorado | undisclosed 

  • Chicago, IL | $185,000

  • Georgia | $380,000 (partial book sale)

  • Boise, ID | $550,000

VIEW CURRENT LISTINGS HERE 

VIEW COMPLETE LIST OF PRACTICES SOLD 

LIST YOUR PRACTICE WITH FP TRANSITIONS

Sold announcements include all closed third-party transactions facilitated by FP Transitions, including private listings, pre-arranged matches, and those listed on the open market. 

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Topics: Selling Your Practice, Acquisition, Buying & Selling, SOLD

NEW Roundtable Talk - The Next Generation Opportunity

Posted by FP Transitions on Jun 26, 2019 9:19:00 AM

The transfer of ownership to a team of next generation talent allows a business to leverage the individual strengths and fresh energy of a younger generation. As a new advisor, ownership provides stability, equity stake, and voice in the future of the business. As a founder, incorporating this team elevates your business, secures longevity, and sparks a new level of growth. The arrangement creates a win-win opportunity for both the founder and the next generation owners.

In our new Roundtable Talk, Elite Client Consultant, Kem Taylor, and our President and Founder, David Grau Sr., JD, discuss the process of going from next generation advisor to next generation owner and the common questions that come with it. They explore the benefits for both founder and next generation owners as well as the importance of communication between the generations for a successful integration.

Click here to watch the full, unscripted discussion.
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Topics: Succession Planning, Talent Recruitment, Equity Pathways, Enterprise

NEW Webcast - Issues Advisors Face

Posted by FP Transitions on Jun 17, 2019 9:12:00 AM

Independent financial advisors face an almost overwhelming set of challenges, but with challenges come opportunities. Many of these challenges fall into areas of:

  • Mergers & Acquisitions
  • Growth & Profitability
  • Talent Retention
  • Succession Planning

These opportunities and challenges are often interrelated. Tackling one challenge often helps solve another, thereby strengthening your business in other ways. A successful acquisition is supported by a strong enterprise that is capable of handling exponential growth, and building a strong enterprise requires the incorporation of next generation talent. Retaining and nurturing next generation talent is made possible with the proper compensation systems, and maintaining an effective compensation system demands business profitability. Bottom-line profitability increases when it is properly balanced with top-line growth. Finally, to bring it all together, growth is supported by building a strong, sustainable enterprise.

In this new webcast, President and Founder David Grau Sr., JD, discusses the top challenges and opportunities of the profession and how they can be addressed using an end-to-end, integrated strategy.

View webcast clip below and click here to watch the full video.

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Topics: Compensation, Succession Planning, M&A, Talent Recruitment, Equity Pathways, Enterprise

Components of a Deal

Posted by Ryan Grau CVA, CBA on Jun 12, 2019 6:00:00 PM

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Whether you are buying or selling, it is important to understand what is being bought and sold and what expectations both the buyer and seller have of each other. Absent these details, it is difficult, if not impossible, to determine if an offer is fair. After all, “fair” is a relative term. The question of fairness would be easy to answer if all deals were done the same way, but the reality is they are not. Nonetheless, there are still common attributes to most deals that can shed light and aid in understanding the underlying terms. This in turn helps both buyer and seller assess the reasonability of an offer. 

WHAT IS BEING BOUGHT AND SOLD?

The sale of many, if not most, financial service businesses are completed as asset sales as opposed to stock sales, where all ownership rights are transferred to a third party. In an asset-based sale, both buyer and seller receive more favorable tax treatment when compared to a stock sale. Since financial services businesses are primarily relationship-based, providing mostly intangible services, what is being sold in an asset sale is rights to a future benefit stream—namely, revenues. However, given the intangible nature of the assets, there is no certainty that a buyer will receive the same amount of revenue from the clients as the seller did. This is why the ability to leverage the seller’s goodwill (the primary asset being bought and sold) to establish proper deal terms that create a shared risk, shared reward scenario become important. 

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Topics: Business Value, Deal Structure, Buying & Selling, Trends in Transactions Study, Transactions

SOLD : April/May 2019

Posted by FP Transitions on Jun 6, 2019 7:54:02 AM

FP Transitions is pleased to announce the recent sales of financial services businesses in the following areas:

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Topics: Selling Your Practice, Acquisition, Buying & Selling, SOLD

Technology and Value

Posted by Jeremy Seicianu, CVA and Ryan Grau, CVA, CBA on May 14, 2019 11:23:18 AM

Tech and Value

Advisors constantly seek an answer to the questions “How can I grow faster?” and “How can I increase the value of my practice?” Generally, their focus is on acquisition. However, growth and value are not singular concepts. In other words, achieving a rapid pace of growth needs to be tackled through multiple facets, and ultimately, growth will be a driver of value. However, many practices are not adequately equipped to grow at the rates they are striving for. Technology provides many of these opportunities. Investing in technology has a demonstrated relationship to higher growth, more affluent clients, increased profits, and increased value. 

The rapid pace of technological advancement has provided financial advisors more opportunities to reach a broader client base and manage client relationships more effectively and efficiently. By implementing and effectively utilizing web-based advertising, digital conference rooms, client relationship management (CRM) systems, and billing and portfolio management software, advisory practices of all sizes are able to more closely track their performance and focus their efforts on the market segments they wish to target.

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Topics: Business Growth, Business Value, Trends in Transactions Study

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