We’re coming off an incredible year from mergers and acquisitions yet again. In fact, we closed out 2022 as one of our greatest ever for FP Transitions, and the same goes for Live Oak Bank. We took a moment to reconnect with James Hughes, SVP of Advisory Lending for Live Oak Bank, to break down the key areas advisors should consider before they enter the 2023 mergers and acquisitions environment.
Topics: Acquisition, M&A, Business Value, Deal Structure, Financing, Bank Financing, Buying & Selling, State of the Market, Next Generation, Valuation & Appraisal, "Buying, Selling, and Valuing Financial Practices", Sell and Stay™, Trends
2021 is just about behind us, and 2022 is knocking at the door. What are the 2022 trends in the financial planning advisory space that we consult? We had an opportunity to ask our experts what they see in their respective crystal balls...
Topics: Selling Your Practice, Acquisition, Multi-Generational Ownership, M&A, Business Value, Deal Structure, Financing, Bank Financing, Buying & Selling, State of the Market, Mergers, Tax Regulations, Building Your Team, Valuation & Appraisal, Transactions, Trends
Setting up and agreeing to proper and reasonable payment terms is an essential part of the selling or acquisition process. The following questions are common for both buyer and seller when it comes to deal structuring, especially in regard to financing the transaction:
- What types of financing are available?
- What is seller financing?
- How are payments structured to promote post-closing co-operation and motivation for both parties?
- Are there contingencies to the payment of the full purchase price?
- Does client attrition affect the final purchase price?
Underlying virtually every acquisition is the assumption that the seller will offer some kind of financing to support the transaction. There are four primary types of seller financing, the last three of which include contingencies that may alter the final purchase price.
- A basic promissory note
- An adjustable or performance-based promissory note
- An earn-out arrangement
- A revenue sharing or fee-splitting agreement
Seller financing is less a matter of the sufficiency of a buyer’s cash reserves and more the basic payment structure technique that recognizes the importance of keeping the seller motivated to help with post-closing client retention. Post-closing seller motivation and support is critical in a transaction that involves a relationship-based business.
Topics: M&A, Financing, Buying & Selling
Topics: Acquisition, Tip of the Week, Financing, Bank Financing