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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.
Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling, Client Experience
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.
Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling
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.
Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling
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.
Topics: Selling Your Practice, Acquisition, Business Growth, M&A, Buying & Selling, Mergers
Whether you’re buying or selling a business, there are a few players that are “must-haves” on your transaction team: personal lawyer, CPA/Tax professional, representative of your IBD/Custodian, personal stakeholders, and a non-advocate, industry-experienced mediator.
The role of each of these players is important to the overall success of your deal, however, the mediator can sometimes be overlooked–often to the disadvantage of your deal. So, why are they so important?
Topics: Selling Your Practice, Acquisition, Buying & Selling, Trends in Transactions Study, Transactions
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The value of your practice is determined by many factors, some obvious, and some not so obvious. And the degree to which some aspects impact your value more largely depends on the reason you’re valuing the business in the first place.
Whether you’re considering acquisition, onboarding new talent–or new owners–, monitoring annual growth, or getting ready to sell, these ten factors have the most significant impact on the value of your business. Focus in these areas can make a major difference in your book’s sustainability and its eventual purchase price when transition time arrives.
Topics: Business Growth, Business Value, Buying & Selling, Sustainability, Benchmarking, Valuation & Appraisal
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Even though it had been in the works for years, last month’s Schwab/Ameritrade merger left both organizations’ advisors wondering what it meant for them. The good news is that the transition has been seen as largely successful, with only some tech snafus which, let’s be honest, is to be expected when you’re talking about huge platform changes for millions of accounts. Adapting to change rarely happens overnight.
Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling
The decision to sell a financial services practice is a difficult one for any advisor to make. After a lifetime of work to build your business, and after years of earning your clients’ trust, how do you turn the job over to someone else? Will they work as hard as you have? Will they care as much as you do? Will they always put your clients’ interests first? When selling your practice, you get just one chance to do it right. The following case study provides some unique insights into the process and illustrates the opportunities, and the mistakes, that many first time sellers make:
Topics: Selling Your Practice, Acquisition, M&A, Deal Structure, Buying & Selling
Independent advisory firms continue to tap FP Transitions for valuation, transaction support and non-advocacy consulting on mergers, sales and acquisitions.
National wealth management consulting firm, FP Transitions, reports a continuous surge in independent financial advisor mergers, sales and acquisitions. With deal flow rivaling that of last year, the company adds another round of lawyers, analysts and industry consultants to its M&A and consulting teams. With more than 70 inquiries for each opportunity, FP Transitions’ data shows market demand continues to outpace supply, and is further fueled by a growing appetite of next generation owners (G2s) engaging in ownership earlier than prior generations.
This momentum of G2s seeking ownership paths has created greater opportunity in the independent space, and FP Transitions’ CEO and principal, Brad Bueermann, cites a ripple effect across the industry. “For decades, FP Transitions has focused on preparing both owners and next generation owners to establish, build and transition firms from one leadership team to the next. What we’re seeing now is a culmination of those efforts meeting the essential demands of 100,000 advisors gearing up for retirement by 2042.” Of these retiring advisors, Cerulli data indicates nearly 45% are planning an internal transfer of ownership to an employee or family member.
Topics: Succession Planning, Announcements, Buying & Selling, State of the Market, Press Release, Press Releases
Price is usually the most difficult hurdle for buyers and sellers to overcome. The value of a business is different for each party participating in a transaction and is based on opinion and the specific set of circumstances for each individual. Price, on the other hand, is the number at which the transaction is executed. Yes, value informs price, but it is not the only influencer. Price is also the result of good faith negotiations between buyer and seller. While negotiation does not necessarily impact each party’s perception of value, it allows for dialogue so that both sides arrive at a price where the value for each individual overlaps and a mutually beneficial deal can be struck.
Topics: Selling Your Practice, Acquisition, M&A, Business Value, Deal Structure, Buying & Selling, Mergers