TRANSITION TALK

Targeted Growth Solutions for Financial Advisors - FREE eBook Download

Posted by FP Transitions on Nov 13, 2019 1:17:01 PM

Today’s independent financial advisors face an endless array of opportunities (and challenges). The key is to identify impediments before they arise and to develop strategies for tackling the issues that present the greatest opportunities for improvement and growth.

There are four main challenges essential to the success of your business:

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Topics: Compensation, Succession Planning, Acquisition, Business Growth, M&A, Next Generation, Talent Recruitment, Enterprise

Accessing the Next Stages of Growth

Posted by Kem Taylor on Jul 17, 2019 11:02:25 AM

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Over the last ten years, increasing numbers of advisors have begun the process of creating sustainable businesses. Many advisors started out as a book or a practice—one-generational models. They took steps to create much more valuable, multi-generational businesses by focusing on enterprise strength and setting up or restructuring essential business structures.

The M&A marketplace is becoming increasingly competitive. Businesses need a strong value proposition to step away from the crowd. Owners who have taken steps to work on building their enterprises are in the best position to leverage their unique business aspects to access more growth opportunities and become successful acquirers or merger partners. 

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Topics: Succession Planning, Multi-Generational Ownership, Organizational Structure, Business Growth, M&A, Sustainability

NEW Webcast - Issues Advisors Face

Posted by FP Transitions on Jun 17, 2019 9:12:00 AM

Independent financial advisors face an almost overwhelming set of challenges, but with challenges come opportunities. Many of these challenges fall into areas of:

  • Mergers & Acquisitions
  • Growth & Profitability
  • Talent Retention
  • Succession Planning

These opportunities and challenges are often interrelated. Tackling one challenge often helps solve another, thereby strengthening your business in other ways. A successful acquisition is supported by a strong enterprise that is capable of handling exponential growth, and building a strong enterprise requires the incorporation of next generation talent. Retaining and nurturing next generation talent is made possible with the proper compensation systems, and maintaining an effective compensation system demands business profitability. Bottom-line profitability increases when it is properly balanced with top-line growth. Finally, to bring it all together, growth is supported by building a strong, sustainable enterprise.

In this new webcast, President and Founder David Grau Sr., JD, discusses the top challenges and opportunities of the profession and how they can be addressed using an end-to-end, integrated strategy.

View webcast clip below and click here to watch the full video.

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Topics: Compensation, Succession Planning, M&A, Talent Recruitment, Equity Pathways, Enterprise

Impact of Consolidation

Posted by David Grau Sr., JD on May 8, 2019 1:09:44 PM

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There has been a fair amount of talk over the past decades about consolidation in the financial services industry. Most of the white papers and articles addressing this concept have presented it in a negative light as though it signals the end of the lifestyle practices that dot the landscape in this profession. Industry regulation, growth, technology, fee compression, competition, and aging advisors forced smaller practices to consolidate just to survive. At least that was the working theory.

As the original organizers of the open marketplace for independent advisors seeking to sell or to acquire, we have a slightly different perspective on consolidation; we view it in a very positive light. Consolidation looks very different than what the prognosticators laid out decades ago. From our vantage point of working with businesses below $2 billion in AUM, we’ve observed the industry is indeed experiencing some consolidation, but not only due to acquisitions or roll-ups by companies like Focus Financial, United Capital, or Dynasty. The consolidation that we see every day is owners of stronger, sustainable enterprises acquiring smaller, one-generational books and practices.

Viewed in this light, how better to look after 250 clients or households when a single-owner advisory practice nears retirement than to find a very similarly structured business that can step in, take over, and provide for the staff members as well? This process works for the buyers, the sellers, and, most importantly, the clients.

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Topics: Multi-Generational Ownership, Organizational Structure, Business Growth, M&A, Sustainability, Trends in Transactions Study

Coming Soon! Trends in Transactions and Valuation Study

Posted by FP Transitions on May 2, 2019 2:37:22 PM

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Our new Trends in Transactions and Valuation Study includes expert insight, commentary, and predictions for the state of the financial services industry. The study dives into last year’s M&A numbers and examines how industry businesses and their values have evolved over the last five years.

This comprehensive, 50-page study features:

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Topics: Business Growth, M&A, Business Value

Shared Risk / Shared Reward - Financing Your Deal

Posted by David Grau Sr., JD on Mar 29, 2018 1:58:00 PM

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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?

SELLER FINANCING

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.

  1. A basic promissory note
  2. An adjustable or performance-based promissory note
  3. An earn-out arrangement
  4. 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.

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Topics: M&A, Financing, Buying & Selling

The Dangers of Napkin Negotiations

Posted by Jeanie O'Reilly Northcutt on Nov 2, 2016 12:55:10 PM

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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

The M in M&A

Posted by FP Transitions on Oct 26, 2016 9:10:40 AM

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M&A. 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.

What about mergers though? Often mergers are lumped in with acquisition talk and statistics. Their role and effect on an advisor’s future, however, is much different than an outright sale or purchase.

Our new book, “Buying, Selling, and Valuing Financial Practices–The M&A Guide,” written by FP Transitions president David Grau Sr., JD, clarifies that mergers are, legally speaking, “the joining together of previously separate companies into a single entity.” And unlike an acquisition / sale, a merger also means that the owners of the previously separate companies remain in the newly formed entity and retain some amount of ownership stake. 

Mergers can be an important part of exit and growth strategies alike. Consider this example from the book:

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Topics: Selling Your Practice, Acquisition, Business Growth, M&A, Buying & Selling, Mergers

CASE STUDY: Open Market Redemption

Posted by FP Transitions on Sep 27, 2016 9:40:43 AM

Open Market Redemption for a Confident Seller - Case Study

When it comes to finding the right buyer, the prospective buyer pool need not be large if it is filled with candidates that fit your criteria and are willing to meet your terms. 

Our newest case study follows the story of one seller who was left at the proverbial altar by a qualified buyer, then found a better match–and an above market offer–using the FP Transitions open market system.

After being burned by an independently found buyer, this seller turned to the FP open market, determined not to be taken advantage of again.

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Topics: Acquisition, M&A, Buying & Selling

NEW BOOK - Now Available

Posted by FP Transitions on Aug 31, 2016 10:42:55 AM

Our new book Buying, Selling, & Valuing Financial Practices - The FP Transitions M&A Guide is now available. Order your copy here, and watch the video below to find out why our President & Founder, David Grau Sr., JD decided to [literally] write the book on Mergers & Acquisitions for the financial services industry.

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Topics: Acquisition, M&A, Business Value, Buying & Selling, "Buying, Selling, and Valuing Financial Practices", Published

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