In this episode of the M&A playbook, James Fisher, JD, VP of M&A and Principal at FP Transitions, shares why your leading next-gen talent should be included in your decisions to buy, sell, or merge your business. As future leaders and owners of your business, you should consider their opinions and priorities for the future of the business.
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Topics: Acquisition, Buying & Selling, Mergers, Next Generation
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.
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Topics: Selling Your Practice, Acquisition, M&A, Business Value, Deal Structure, Buying & Selling, Mergers
In this M&A Playbook episode James Fisher, JD, VP of M&A and Principal at FP Transitions, shares insight on one of the biggest threats to your transaction–deal fatigue.
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Topics: Acquisition, Deal Structure, Buying & Selling, Mergers
In this episode of the FP Transitions M&A Playbook, James Fisher, JD, VP of M&A, shares a timely update of M&A activity and trends.
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Topics: Acquisition, Buying & Selling, Mergers
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Despite the continued surge of wealth management M&A activity, one surprising fact remains: most of these market participants are engaging in a transaction for the very first time. While there are aggregators and larger RIAs that will continue to build up their business through strategic acquisitions, the majority of today’s deals spark from a mutual attraction either from aligned competencies, or complementary competencies, that allow both firms to amplify their growth and sustainability.
According to James Fisher, Vice President of Mergers and Acquisitions at FP Transitions, “Many practices are looking to be acquired or merge with a larger business to spur growth, to benefit from economies of scale, to offload compliance and day-to-day operations, to increase bandwidth and offerings to clients, or to assist with the retirement of one or more senior owners/partners, among other reasons.”
Regardless of experience, it takes a lot of patience, communication, time, and expertise to navigate the entire deal process. For firms going through this, on any side of the table, negotiating and documenting the transaction can often be more time consuming than anyone anticipated, creating the perfect environment for an all-to-common problem: deal fatigue.
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Topics: Selling Your Practice, Acquisition, M&A, Business Value, Deal Structure, Buying & Selling, Mergers
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...
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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
Today’s Independent financial advisors face an endless array of challenges and opportunities. Identifying challenges before they arise is key for finding solutions and developing strategies for tackling the issues that present the greatest opportunities for improvement and growth.
The four biggest opportunities are:
- Balancing Growth and Profitability
- Recruiting and Retaining Talent
- Creating Business Sustainability
- Growth Through Mergers and Acquisitions
Balancing Growth and Profitability
Growth and profitability are inextricably linked and balancing the two within a single practice is the difference between building a one-generational practice and a multi-generational, sustainable enterprise.
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Topics: Compensation, Succession Planning, Acquisition, Business Growth, Mergers, Talent Recruitment, Sustainability, Enterprise
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:
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Topics: Succession Planning, Acquisition, Business Growth, Mergers, Continuity
Last month FP Transitions President and Founder, David Grau Sr., JD, joined Scott and Pat on the Advisor2Advisor podcast to discuss common concerns related to mergers, and an all too prevalent (and costly) mistake that some mature advisors make when they fail to capitalize on the equity they’ve established by creating a viable succession plan. Listen here.
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Topics: Succession Planning, FPT in the News, Mergers
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.
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Topics: Acquisition, Buying & Selling, Mergers, Continuity, Sustainability, Equity Pathways