TRANSITION TALK

The FPT Open-Market Advantage

Posted by FP Transitions on Feb 23, 2021 1:43:28 PM

The FPT Advantage

When it's time to sell your financial advisory practice, knowing the value of your business is just as important as finding the right buyer. But as you begin exploring your options, determining who will be the right buyer to take over your business often takes center stage. The FP Transitions® Open Market will not only locate a new owner who is a good fit for your clients and investment style, but also help you obtain the most value from the sale.

Benefits of the FP Transitions Open Market

Self-sourced transactions have the potential to produce reasonable offers for your business, but they're rarely going to be the best offers. While you may receive an unsolicited offer or an inquiry from a friend expressing interest, we encourage you to cast a wider net for your buyer search.

Expand your pool of potential buyers with FP Transitions’ Open Market to realize your asking price (or higher). Our average open-market buyer-to-seller ratio is 75:1.

With a network of over 30,000 advisors nationwide, you won't just find more interested buyers, you'll find more qualified buyers. Many advisors in our network have put in the work to strengthen their acquisition prospect. By working with our membership and consulting teams to continually improve their own structure and value they’ve created sustainability and business longevity–leaving your clients in good hands.

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Topics: Selling Your Practice, Acquisition, Business Value, Buying & Selling

Aligning Ownership Priorities for Success

Posted by Kem Taylor on Jan 28, 2021 2:17:34 PM

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In our over ten years’ experience helping businesses design and implement internal succession plans, we’ve seen that each generation—G1, G2, and G3—can, naturally, have their own distinct points of view and priorities. These differences are common and normal. By acknowledging these differences and communicating with each other, teams can adjust their expectations, align their priorities, and see their transition plans work out to the satisfaction of everybody.

But how do you align different priorities within your own ownership team? Below are three examples of how to facilitate this alignment. These examples are not of particular clients, but are taken from a conglomeration of advisor situations over the years.

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Topics: Succession Planning, Acquisition, Business Growth, Next Generation

The Opportunity of a New Year

Posted by FP Transitions on Jan 4, 2021 2:47:00 PM

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Happy New Year!

More than ever, we look forward to 2021 with the sense of reset and resolution that comes with the changing of the calendar year. We can breathe a sigh of relief that we made it through the chaos and onslaught of 2020.

If we take a moment to look back before we look ahead, we can see just how far we’ve come and how resilient we’ve been as a community of global citizens, financial professionals, and business owners. 

In terms of M&A activity, the financial services industry has held its ground despite the market downturn that came earlier in the year. This is a reflection of the shrewdness of professionals like yourself. In the face of market uncertainty, you rose to the challenge, adapted as necessary, and pushed forward.

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Topics: M&A, State of the Market, FPT in the News

Managing Roadblocks Along the Next-Gen Ownership Path

Posted by FP Transitions on Dec 8, 2020 7:24:01 AM

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When it comes to planning for the future, flexibility is important. Change is bound to happen–whether we see it coming or not. Planning for future growth and ownership of a business is no different. As a next-generation professional in this industry, being able to adjust your course while keeping your eye on the ball is imperative.

In the past, we’ve written about how founders and existing ownership teams can prepare for and adapt to changes that might come their way. While next-generation professionals may encounter similar roadblocks, you will face unique challenges of your own. In the current phase of your career–building experience, relationships, and leadership potential–the course correction discussion is less about planning for the future of a business as an owner, and more about carefully plotting the future of your career.

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Topics: Succession Planning, Multi-Generational Ownership, Next Generation

The Case Against Revenue Splits [Article]

Posted by FP Transitions on Oct 28, 2020 6:16:00 AM

With all of the modern tools for practice valuations and equity management solutions available, some financial advisors still choose to use revenue splits, or a revenue-sharing arrangement, as a makeshift succession plan. For a practice owner, this can be a poor and shortsighted business decision for several reasons, including:

  • Unfavorable tax implications.
  • Potential asset and client disputes.
  • Reduced business value.
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Topics: Compensation, Succession Planning, Enterprise Strength, Cash Flow, Sustainability

Identifying 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 are important and weighty decisions. 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

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