FP Transitions is pleased to announce the recent sales of financial services businesses in the following areas:
If you’ve spent much time around Portland, Oregon, you know tap houses, microbreweries, and brewpubs are about as prolific as coffee shops. The Pacific Northwest takes their food very seriously, and beer and wine are an integral part of that. In the early days, first-generation craft brewers (and their counterparts in the wine industry) were entrepreneurs or career changers who wanted to break free from the corporate world and be their own bosses. Businesses began in garages and strip malls—small spaces that provided just enough room to get the businesses off the ground. Small brewers, looking to increase scale and reduce their individual costs, collaborated to share expenses for equipment or to piggy-back on each other’s licenses. Founders have shown grit, resourcefulness, and thrift to further their businesses through the first stages. Now, the most successful operations are evolving and acquiring, and the next generation of professionals are entering the industry with specialized degrees and focus on their careers. Meanwhile, boutique and even once “cult” brands struggle to maintain their position amidst stronger competition and a consolidating industry.
Does this sound familiar? The issues of scale, expense management, and growth planning are not unique to financial services. Other professionals begin their businesses with similar limitations, which they must address and overcome in order to reach a baseline of success. Passion and perseverance are powerful fuel, but the challenge comes—for financial advisors as well as craft brewers—in creating a business that can support sustainable growth. Oftentimes, the skills necessary to make this transformation are not innate to the business owner and reluctance to seek help is precisely what hinders their growth or even survival. As entrepreneurs who are passionate about their field, getting outside guidance is necessary to overcome their limitations and see the business into the next stage.
FP Transitions is pleased to announce the 2019 sales of financial services businesses in the following areas:
- Richard Metro Area, VA • $520,000
- Central Illinois • $390,000
- New Haven Area, CT • $2,000,000
- Colorado • $200,000
- Eastern Pennsylvania • $610,000
- Minneapolis Metro Area • $700,000
- Northeastern Wisconsin • $190,000
- Atlanta Metro Area • $330,000
- Eastern New Jersey • $1,500,000
- Eastern New York State • $300,000
- New York, NY • Undisclosed
- San Francisco Bay Area • $1,100,000
- Pacific Northwest • $950,000
Mergers are transactions that can take on many shapes, apply to almost any size advisory enterprise, and are infinitely customizable depending on the unique details and situations of the participating advisors.
Advisors commonly think of a merger as the statutory combination of two practices into one in a tax efficient manner, but it’s better to think of the merger process as the combination of two or more advisors’ strengths, client bases, and cash flow streams, while reducing or eliminating weaknesses and inefficiencies – lofty goals to be sure, but readily achievable.
The reality is that mergers can be used to address a much wider set of challenges and opportunities including:
- Growth through acquisition (i.e., by merging a small practice into a larger practice, and then setting up an internal succession/continuity plan);
- Finding a successor, or becoming a successor (by first creating an internal, minority equity partner who later completes the buy-out of the founder’s S-corporation or LLC);
- Establishing a practical and reliable Continuity Plan and protecting the value of your practice against your sudden death, disability or retirement is best accomplished by having an equity partner such as may be created through a merger;
- Improving Enterprise or Revenue Strength through increased efficiencies and the added strengths of other advisory owners;
- Expanding market territory, expertise, and services;
- Building a strong, enduring business by combining the diverse strengths of multiple contributors.
To help illustrate these benefits, consider the following three examples as discussed in our recent Roundtable Talk, “Every Merger Is Unique,” below, each representing an actual merger between independent advisors that we helped orchestrate in 2018:
As we step into the new year, we like to reflect on the successes of our clients over the past year. In 2018, FP Transitions is proud to have helped advisors achieve their business goals through a variety of strategies including internal succession, enterprise structuring, sustainable business growth, mergers, and external sales.
Over the last year helped facilitate external and internal transitions all over the country, including in :
We're also pleased to announce the most recent sales of financial services practices in the following areas!
- Central California • $1,500,000
- Southeastern Connecticut • $800,000
- Chicago, IL • $317,000
- Northwestern US • $1,000,000
- Eastern New York State • $410,000
- Northwestern Wisconsin • $340,000
- Northern Alabama • $3,000,000
- Columbia Metro Area of South Carolina • $1,360,000
Experienced business owners recognize the importance of tracking and monitoring the value of their practice over time. They know their practice is their most valuable asset, and by valuing it, they are empowered to grow, protect, and realize the value they have built.
Following are ten situations where it’s essential to have a current value and accurate understanding of your business.
1. Increase Value
To cultivate growth and increase the value of your business, you need to have a starting point—a place to grow from. An accurate and comprehensive valuation will identify value drivers and growth opportunities, allowing you to create an informed growth strategy and make changes that will improve performance. The ability to track those changes and the value of the practice year after year enables you to see your progress and ensure your growth is on target
2. Benchmark Your Business
Tracking your value year after year allows for accurate benchmarking of the business. A thorough benchmarking report will look at your business and compare it to similar-sized businesses in the market, evaluating your company’s standing against the competition. Benchmarking reports reveal how your business stacks up against your peers as well as against leaders in the industry.
In 1953, a start-up business called the Rocket Chemical Company and its staff of three set out to create a line of rust-prevention solvents and degreasers. Toiling in a small lab in San Diego, California, they set about to create a “water displacing” formula for use in the aerospace industry. It took 40 attempts to get the formula figured out.
But figure it out they did, and WD-40 was born. The name stands for water displacement formula perfected on the 40th try. Imagine what would have happened if the inventors had given up after two dozen or so really solid attempts?
The story, and the point, of course, is bigger than trying hard and eventually succeeding. WD-40 was initially a product limited to special uses, an example of which was protecting the outer skin of the Atlas missile from rust and corrosion. But that was just for starters. The product actually worked quite well for a variety of other uses–so well that several employees snuck some WD-40 cans out the plant to use at home on more mundane tasks like squeaky hinges and rusty nuts and bolts. The product eventually became a household staple. By innovating and adapting to the market, this small group of entrepreneurs created something great.
FP Transitions is pleased to announce the recent sales of financial services practices in the following locations:
- Santa Cruz, CA • $221,000
- Southern New Jersey • $668,000
- Maryland • $652,000
- Southern Oregon • $261,000
- San Francisco Bay Area • $583,850
- Northern California • $1,800,000
FP Transitions is pleased to announce the sale of financial services practices in the following locations during the months of July and August:
- Central Coast of California • $3,200,000
- Cedar Rapids, IA • $807,500
- Kansas City Area Kansas • $1,198,812
- Little Rock, AR • $1,450,000
- Los Angeles, CA • $1,600,000
- Research Triangle of North Carolina • $1,221,696
- Southern Coast of Florida • $880,000
- Southeastern Coast of Florida • $794,037
- Boca Raton, FL • $988,046
It is without a doubt a “seller’s market” when it comes to financial advisory practices. With an average buyer to seller ratio of 50 : 1, sellers can be picky. Given the sheer volume of qualified buyers that send in inquiries for practices listed by FP Transitions on our open market system, it is extremely important for potential buyers to put their best foot forward and show the seller why they are the “cream of the crop.”
Remember, your inquiry is the first communication you will have with the seller, who likely knows nothing about you. While we don’t recommend drafting a novel, your inquiry should at a minimum tell the seller enough detail to pique the seller’s interest. Inquiries that merely state, “I have cash,” “Let’s talk,” “I need more information,” or “See our website for more information,” are usually immediately stricken by the selling party from consideration, regardless of how well qualified the inquirer may actually be. This is because experienced and successful buyers take the time to make a strong first impression.