TRANSITION TALK

Considering Key Stakeholders

Posted by FP Transitions on May 8, 2024 9:10:51 AM

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ARE YOU CONSIDERING THESE IMPORTANT STAKEHOLDERS IN YOUR TRANSACTION?


Finding the right transaction partner, and executing a potentially complicated and emotional transition, can attract most of the consideration in an M&A deal. It’s important to also look beyond the immediate stakeholders–you, your ownership team, and your transition partners–to a few other groups who will be greatly impacted by the change: your family, your team, and your clients.

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Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling, Client Experience

Important Legal Updates 2024: What They Mean for You & Your Business

Posted by FP Transitions on Mar 26, 2024 4:16:07 PM

Federal, state, and local laws are constantly shifting and changing. Which is why it’s important to have consistent communication with your legal counsel so that you are made aware of any new and changing regulations that may affect your business or affect you as the business owner. This year there are three significant changes to be aware of regarding ownership transparency and certain employment and contractor agreements.

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Topics: Industry News, Announcements, Compliance

The Rolling 5-Year Plan: Solving Succession Challenges

Posted by FP Transitions on Feb 21, 2024 9:00:00 AM

One of the best things about financial advisors and wealth management professionals – you love your job. You enjoy the puzzle and the prospecting. You enjoy the paycheck. And you enjoy your clients. We know this because we know you. This is what you and your peers tell us every day on the phone, in emails, and at conferences. 

This is why when it comes time to talk about an eventual exit and the “R-word” you wield so effectively with your clients, you brush off the conversation. You say, “It’s too early to talk about that, ask me again in five years.” And the next year you say the same thing, and the next, and the next, until suddenly it’s time and you just gotta work with what you’ve got.

On our side of the industry, we shake our heads and call it the “Rolling 5-Year Plan.”

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Topics: Continuity Planning, Succession Planning, Talent Recruitment, Sustainability, Sell and Stay™

Buyer and Seller – Finding the Perfect Match

Posted by FP Transitions on Feb 13, 2024 9:00:00 AM

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One could argue that the open market acquisition process is a bit like online dating. Using a finite amount of fields and characters you must convey to someone–whom you’ve never met and know a limited amount of information about–that you are worth their time. That you are worth their time conversing with, spending time together, and potentially making a binding commitment with.

And like dating, finding the right match isn’t about how much someone is willing to spend on dinner, but how many of your attributes complement each other, how well you get along, and how much you trust each other. These matters are paramount to making a relationship work–whether it’s friendship, love, or business acquisition. 

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Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling

Preparing for the Next Tranche in Your Succession Plan

Posted by Kem Taylor on Dec 4, 2023 9:30:00 AM

Blog Banner Refresh - Preparing for the Next Tranche in Your Succession Plan

Your firm’s succession plan is designed to gradually transition ownership, leadership, and growth responsibilities to the next generation of advisors. The goal is sustainability of the firm, and it is accomplished through a plan that coordinates the changing roles of the founder(s) and the successor team over many years. 

Selling equity in the business in a series of steps or “Tranches” gives both the founder and the next generation of owners the time to wisely manage the transition and to prepare for the changes to come. The transfer of ownership from the founders (G1s), to the second and third generation of owners (G2s and G3s), starts with Tranche 1. Tranche 1 is usually a sale of 10% to 20% of ownership to the next generation. Tranche 1 is often called the incubator stage and allows for all parties to test the waters and to prepare the business structure for the journey ahead.

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Topics: Succession Planning, Business Growth, Next Generation, Building Your Team

Building the Right Team to Support Your Business Priorities

Posted by FP Transitions on Dec 4, 2023 9:00:00 AM

Blog Banner - Building the Right Team to Support Your Business Priorities

One of the most difficult challenges for independent advisory businesses is finding and retaining the professionals they need to service a growing client base and perpetuate sustainability. The talent pool is extremely competitive, especially in the financial services industry. The value of a strong team and integrated business is ever increasing, and the number of new advisors coming into the profession is still relatively low. To be successful in building the right team, you’ll need to be strategic in your efforts and focus on the people that best align with your business priorities and your plans for growth.

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Topics: Compensation, Organizational Structure, Business Growth, Next Generation, Talent Recruitment, Sustainability, Wealth Management, Business Operations

The Dangers of Napkin Negotiations

Posted by FP Transitions on Nov 23, 2023 9:00:00 AM

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The financial services industry is a personable one. Professional networking and client prospecting depend on your charisma and ability to connect beyond surface pleasantries. But when it comes to selling your business, it’s important to keep your cards close to your chest.

It’s very easy to get excited about the prospect of transitioning your business and moving forward in life–especially, when you’re talking with a colleague you’ve known for years. However, the excitement can cloud your ability to think through details and maintain a healthy level of confidentiality. It’s important to avoid casual negotiations and hashing out deals without proper documentation.

These casual conversations–also referred to as handshake agreements, or napkin negotiations–can lead to a lot of problems, including a loss of realized value. 

SHARKS IN THE WATER

The first issue that could arise from the casual mention that you’re even thinking about selling your business is the influx of phone calls or visits from people who want to buy. It’s like blood in the water. And while buyers flocking to you may seem like a boon, it can quickly become overwhelming. Without an efficient screening system, it becomes time consuming and difficult to sift through the phone calls to find serious and qualified candidates, let alone the person who fits your ideal criteria to take over your business. You also make yourself vulnerable to predatory buyers.

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Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling

M&A Trend Alert: Longer Post-Closing Periods - M&A Playbook

Posted by FP Transitions on Nov 22, 2023 12:05:00 PM

For a lot of transactions, the tail end of the transaction can be for 3 to 10 years.

That's kind of the new model of M&A right now. It used to be that we only saw transactions when an advisor was ready to exit. Now we're starting to see advisors think about M&A earlier and earlier in their career–whether that’s preparing for a sale or exploring a merger.

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Topics: Acquisition, Buying & Selling, Open Marketplace, M&A Playbook

Mergers - A Nontraditional Growth & Acquisition Strategy

Posted by FP Transitions on Nov 6, 2023 9:00:00 AM

Blog Banner Refresh Mergers - A Nontraditional Growth &  Acquisition  Strategy (1)

Mergers & Acquisitions – everyone’s favorite topic. Understandably so when one of the fastest ways to grow is to acquire and as such, add exponentially more clients (and assets) to your business in one fell swoop.

But what about mergers? Mergers are often lumped in with conversations and statistics about acquisitions, but their role and effect on an advisor’s future is much different than an outright sale or purchase. In our book, “Buying, Selling, and Valuing Practices – The M&A Guide,” FP Transitions’ president, David Grau Sr., JD, clarifies that mergers are, legally speaking, “the joining together of previously separate companies into a single entity.” Unlike an acquisition or sale, a merger means that some or all of the owners of the previously separate companies become owners of the post-merger entity. 

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Topics: Selling Your Practice, Acquisition, Business Growth, M&A, Buying & Selling, Mergers

Making the Acquisition Process Work for You - M&A Playbook

Posted by FP Transitions on Nov 3, 2023 1:54:00 PM

This Playbook is all about maximizing your M&A efforts and going with the flow of the system for acquisition success. You don't need to do everything all at once from the jump. Winning gold is about taking it one heat at a time. 

There are people in the initial phase of inquiring on a practice on the open market who are trying to close the deal in that first inquiry message. And that's just the cart way ahead of the way ahead of the horse.

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Topics: Acquisition, Buying & Selling, Open Marketplace, M&A Playbook