TRANSITION TALK

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.

Over the past two and a half decades of working in this industry, as a regulator, an attorney and now at FP Transitions, I can safely say that I have never seen a better time to be the seller of an independent financial services or advisory practice. The commonly applied term, “a seller’s market,” barely does this observation justice. We are seeing so many supporting elements (price, terms, taxes, financing, demand, etc.) come together right now, that this may be the peak for sellers for years to come.

So here is my message: If you’re thinking about selling what you’ve built and handing the reins to a strong, next generation acquirer at any time in the next two to three years, you need to start thinking about these items today. You really need to understand why this may be the perfect time to call it a day and to sell for the full value you’ve built over the length of your career and to let someone else be responsible for the future. In a nutshell, here are the elements that are creating, perhaps simultaneously, this great opportunity at the peak of your career:

In our second book, Buying, Selling, and Valuing Financial Practices (the M&A Guide), we introduced the term of a “predatory buyer” to our readers. If you are thinking about selling your practice one day, you need to understand how certain buyers will approach you, how to protect yourself, and what, or who, to watch out for. In this article, we will answer these important questions for potential sellers: