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The Rolling 5-Year Plan: Solving Succession Challenges

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

The Rolling 5-Year Plan Solving Succession Challenges

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

Blog Banner - Buyer and Seller Finding the Perfect Match

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

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

Blog Banner - The Dangers of Napkin Negotiations

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

Purpose, Perspective, Premise — the Three Ps of Business Valuation

Posted by FP Transitions on Nov 1, 2023 9:00:00 AM

Banner Blog - Purpose, Perspective, Premise — the Three Ps of Business Valuation.

Purpose, perspective, and premise are the foundations of business value. With these three key aspects we can weigh an incredible amount of detail and data to determine the most accurate value of the business–for any circumstance. The more accurate the value, the better the outcome of your situation, and the better your ability to plan ahead for future growth and higher profits.

Everything starts with “why.” What is the purpose for the valuation? As we like to say, “value is in the eye of the beholder,” and purpose allows us to pinpoint that perspective to know what makes a business valuable to them. And when we drill down into situational specifics and the nuances of perspective, we can understand the future-state of the business and the premise of the valuation to fine tune its accuracy.

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Topics: Succession Planning, Business Growth, Business Value, Benchmarking, Valuation & Appraisal

What Sellers Want - Multi-Generational Buyers - M&A Playbook

Posted by FP Transitions on Oct 25, 2023 3:33:00 PM

One of the other things that I see a lot more sellers asking for is multi-generational ownership and multi-gender ownership. I encourage my clients to diversify their ownership group as much as possible.

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Topics: Succession Planning, Acquisition, Multi-Generational Ownership, Buying & Selling, Open Marketplace, M&A Playbook

Fit Above Everything Else - M&A Playbook

Posted by FP Transitions on Oct 4, 2023 12:21:00 PM

The biggest mistake that I see people make–the single biggest mistake–when they are in pursuit of an offering that we have on the open market, is they position themselves as a great practice, they don't position themselves as a great fit. Really not understanding what fit is and just thinking I can afford this practice and I'm 50 miles from it. And while those things can be important, there are other things that are critical in what fit is and what goes into us finding the perfect fit.

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