Creative Acquisition Approaches

Posted by Rachel Beckwith on Aug 8, 2018 11:13:29 AM

Creative Acquisition Approaches

One of the fastest ways for independent financial service businesses to grow is to acquire another book of business, adding a lump of clients and their assets to a portfolio all at once. The reality is, however, that setting out to buy a business isn’t that simple. 

First, your business must be able to handle a sudden influx of new clients. Your infrastructure must be strong, you must have the people and resources available to provide quality service to clients immediately following the transition, and you must have the financial means to purchase. Second, the current marketplace right now is favoring sellers more than ever. Not only are we experiencing a 50:1 buyer to seller ratio on the open market, but values are at a high and the competition is stiff. We’re seeing a greater number of experienced buyers vying for a seat at the table, and we’re seeing more savvy sellers making strategic decisions. Finally, being able to meet the asking price alone doesn’t necessarily constitute a good fit. Even if you have everything in place to make an acquisition, you must meet a seller’s specific criteria in other areas to be considered.

The good news is that our industry has several other ways to achieve the same exponential growth as buying a book of business without a “traditional” acquisition. Strategies like mergers, continuity partnerships, succession planning, strategic partnerships, and sell & stay tracks offer alternatives for advisors who may not have the enterprise strength to execute a traditional acquisition strategy. The following avenues take planning and patience, but they can yield incredible growth and value in the long run.


Mergers–the M in M&A–are similar to traditional acquisitions in that they pool two or more books of business into one enterprise, but they differ in that they are a combining of businesses, usually into one new entity, and retain most, if not all, owners rather than an owner simply selling and walking away. Every merger is unique to the situations and goals of the parties involved and provides benefits and growth that go beyond a simple doubling of resources and clients.

A merger is an excellent growth strategy for smaller practices and younger advisors. This can achieve the desired spike in growth while also incorporating the additional resources and personnel to support it. Here smaller advisors gain ownership of a much more valuable company while larger businesses get an experienced G2 along with their clients in one fell swoop.


A formalized continuity plan is essential to protect the clients, business, and family against the unexpected exit of an owner. It is important to find the right continuity partner who is ready to step in should something happen to you. But what are the benefits of being someone else’s “safety net?” As a continuity partner, you may find yourself in the right place to acquire the business in the event of the owner’s exit–either planned or unplanned.

It’s not about waiting for tragedy to strike; it’s about building trust. While continuity partnership as an acquisition strategy does not yield immediate growth, you are building strong, trusting relationships with the owner–and the clients. If, or when, your partner finds themselves in a position to sell or slow down, as a trusted partner, you’ll be poised at the top of the potential buyer list.


This strategy involves the owner of a firm selling their ownership in a business while remaining on as an employee who still earns a wage and benefits. This is an enticing option for advisors who would still like to earn an income but are interested in winding down their management obligations. Often sellers who opt for this strategy are interested in a gradual transition into retirement but have no G2s in the picture, or are simply no longer interested in the management side of business and would like to concentrate on other aspects of being an advisor. 

As a buyer, it’s important to be aware of this path, especially when encountering an interested, yet reluctant, seller. They may not be aware of the Sell and Stay™ option and the benefits it offers. Being amenable to this type of transaction opens up more opportunities for acquisition.


This isn’t a drastically different strategy than a traditional acquisition, but it is an option that not many sellers are aware of. Like the Sell & Stay strategy, this is an avenue owners can take when they’re ready to slow down, but not ready to stop working altogether and give up their income. Alternatively, selling a partial book is a strategy some advisors employ when refocusing their business in terms of investment products or demographics. As a potential buyer, be on the lookout for these partial book opportunities in your network and on the open market.


This strategy falls somewhere between networking and continuity partnership. Make connections and build relationships with other advisory businesses in your area and network. Form partnerships that benefit both client books, such as providing referrals for certain investment paths or professional services. Host joint educational or networking events in the community where you can facilitate connections between your respective client bases.

These sort of alliances don’t have to be between two advisory firms. Referral programs and partnerships between businesses with similar client bases can be a smart client prospecting strategy. For instance, your advisory firm could link with a local CPA, law firm, or life coach to collectively open up a pool of prospective clients. 

As an alternative growth strategy, strategic alliances are not a guaranteed acquisition down the road, but they build trust and put you in a good position if a partner decides it’s time to reduce their book or retire. Regardless, forming these partnerships increases value and boosts client growth.


While new advisors in the industry have none to few clients and likely have not had a chance to start building their practice, most still have ownership aspirations. As a young advisor, addressing this goal early on in your career allows you to be strategic about joining firms and finding equity opportunities in established businesses.

As you look for the right financial services firm to work with, remember to ask questions about growth opportunities and whether or not they’re open to multi-generational ownership down the road. Be sure the business is capable of meeting your long-term goals. Once you’ve found your firm, you must prove that you’re ownership material. From day one, adopt an ownership mentality and get involved wherever you can. Go beyond your specific role and learn about other aspects of the business. When you’ve taken the time to prove you’re capable of leadership and ownership, ask for it.

Fit is Paramount

No matter which acquisition strategy you employ–traditional, merger, partnership, or some other path–the fit is the most important thing. None of these are a quick handoff as the seller walks out the door. Each will require all parties to work together for a certain amount of time to build foundations and allow for a smooth transition of business resources and clients.

When choosing who might one day be caring for their clients, owners are looking for buyers or partners that operate with certain philosophies, standards, and practices that align with their own. 

What’s more, fair dealing and goodwill goes a long way from the outset of a deal or partnership. As a prospective buyer/partner, you’ll likely have more experience in acquiring than a seller has in selling. Don’t be a predatory buyer; offer fair terms, share your expertise about the process, and be patient. It’s all about building trust with the seller and putting them at ease.

Finding Opportunities

Aside from the open market, which is a good place to find standard acquisition opportunities and even partial-book sales, there are other places you might find potential sellers or partners. There are merger, continuity, and succession matching services that can help you search for the right opportunity. Professional and local networks (i.e. BD/Custodial networks or organizations like FPA, NAPFA, and NAPA) provide a good opportunity to make connections that might one day turn into a partnership or acquisition.

There are many bulletin board sites available as well, which can provide leads for each of the strategies described above. However, these sites often have little filtering and tend to be lists of anything and everything on the market. The goal of these sites is to simply expose prospective sellers to prospective buyers, which is certainly important and relevant, but often does so out of context and fails to account for other pain-points of the process. Be diligent and proceed with caution. 

Setting Your Own Path

There’s no denying that acquiring a book of clients is the fastest way to grow your business. Luckily, there are many strategies for achieving this goal, and there is likely one that will work for you, whatever your current situation is, if you know what opportunities to look for. 

Taking a creative approach to acquisition is about being open to other growth paths beyond the traditional transition of clients from one advisor to another. By thinking broadly, and more strategically, you open up your options and increase your chances for success. 

Topics: Acquisition, Buying & Selling, Mergers, Continuity, Sustainability, Equity Pathways