TRANSITION TALK

Succession Planning Course Corrections

Posted by FP Transitions on Mar 29, 2022 12:30:00 PM

Course-Correction

Succession planning is a critical, foundational element in building a sustainable business. Incorporating new talent into your ownership structure is a process that takes continuous planning, evolution, and monitoring. When done correctly, succession planning ensures incredible employee culture, firm growth, and enduring business value. When the brunt of the planning is complete and documented with the help of partners like FP Transitions, firms have to stay focused as they begin executing their plan. Owners and next generation leaders must engage in transparent communication to navigate the inevitable bumps that can occur throughout the planning and execution of a succession strategy. The reality is, we’re all human. Life presents curves, and personal and professional goals can change. These anticipated bumps can necessitate larger course corrections in order to keep your plan on track.

Typically there are three areas where succession plans may need course corrections: if founder/owner plans change, if successor plans change, and if Plan B needs to be activated.

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Topics: Succession Planning, Selling Your Practice, Sustainability

An Unsolicited Offer to Buy – Is It Time to Sell?

Posted by Kem Taylor on Mar 22, 2022 7:45:00 AM

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The market for wealth management firms has dramatically changed. 20 years ago, people didn’t see resale value in these businesses. When an advisor retired, they hoped they’d find someone who would agree to take over their book. As the industry matured, sales slowly started taking place. It wasn’t easy – there were no standards for valuation or deal terms, no strategies for client retention, few financing options, and concerns about liability.

These days, those issues have mostly been resolved, providing for a real marketplace and more competitive deal terms for businesses. It’s a seller’s market, and in our open marketplace sellers often field 75 or more inquiries for a listing. Practices are being purchased by synergistic partner firms that are aligned from principles, staff and client standpoint. There are many more options for an advisor than existed 20 years ago.

EXPLORING YOUR OPTIONS

Every firm I have talked with in the last year – both large and small -- has received inquiries and offers If your business plans do not include selling, you could file the offer away for the future in a file that may well include other such letters. On the other hand, maybe the offer sparks your interest to learn more about what options you have in the current marketplace. Selling what you have built can be a good strategy when the time and circumstances are right.

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Topics: Selling Your Practice

Trends 2022. Predictions from the Experts.

Posted by Doug Kenck-Crispin on Dec 7, 2021 4:09:57 PM

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

Deal Fatigue - Top Factors for Fatigue and how to Minimize Them

Posted by FP Transitions on Sep 16, 2021 1:01:24 PM

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Wealth management firms seeking rapid growth are increasingly turning to mergers and acquisitions (“M&A”) as a solution.  As such, we are seeing a lot of M&A activity involving firms with multiple owners, staff, and even real property. 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. Given these complicating factors, negotiating and documenting these M&A transactions can often be more time consuming than the parties expect, which creates the perfect incubator for deal fatigue.   

Deal fatigue is a condition during negotiations when one or more of the parties begins to feel frustrated, hopeless, irritated, or even angry about the pace of the transaction.  Deal fatigue–at some level–is almost impossible to avoid in a complex transaction, but if caught early and prepared for it can almost always be successfully managed. If not, deal fatigue is one of the surest ways to destroy a transaction. The key is to know the causes and signs of deal fatigue as well as the tools to minimize its negative impact.     

Causes of Deal Fatigue 

There are of course many causes of deal fatigue, but some of the most common ones that we routinely see are: 

  • Time 

Deal fatigue is typically correlated with the time it takes to complete an M&A transaction. Typical transactions take about three months. Parties can get frustrated if they feel like they’re being rushed, while others may feel frustrated if the process starts to feel too drawn out. Striking a balance between the two is important.

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Topics: Selling Your Practice, Acquisition, M&A, Business Value, Deal Structure, Buying & Selling, Mergers

Leveraging the FPT Open-Market Advantage

Posted by FP Transitions on Aug 31, 2021 1:34:12 PM

When it's time to sell your financial advisory practice, knowing the value of your business is just as important as finding the right buyer. But as you begin exploring your options, determining who will be the right buyer to take over your business often takes center stage. The FP Transitions® Open Market will not only locate a new owner who is a good fit for your clients and investment style, but also help you obtain the most value from the sale.

 

Benefits of the FP Transitions Open Market

Tapping into an open marketplace has benefits for both buyers and sellers. Buyers have access to a larger pool of acquisition opportunities with the potential to meet their strategic goals. This includes those outside of their already established network and area, allowing them to expand their reach. And sellers gain access to a large number of qualified buyers in order to find the best possible buyer for their business.

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Topics: Selling Your Practice, Acquisition, Business Value, Buying & Selling

Debunking Five M&A Myths

Posted by FP Transitions on Aug 20, 2021 3:47:30 PM

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During our 2021 Mid-year Market Update, in addition to up-to-date transaction data and trends, our experts, M&A Director James Fisher, JD and CEO Brad Bueermann, explored some myths and misconceptions about the current M&A marketplace.

The problem with misinformation is that as a buyer you may find yourself discouraged from exploring acquisitions or mergers as a growth strategy or from inquiring on businesses that could be a great fit and expand your reach. As a seller, misinformation can lead you to compromising your fit criteria or from exploring a wider pool of buyers.

The following are the top five misconceptions we hear from advisors and from other market participants.

MYTH: Reported transaction data shows a complete view of the industry M&A marketplace.

No current reporting of annual M&A transactions–including ours–encompasses activity across the entire industry. Even if data is being reported based on publicly advertised transactions, many are private and not publicized as larger M&A deals tend to be. Details and terms are often kept confidential regardless, and, as the old adage goes, "the devil is in the details." So, comparing the data and transaction activity across firms participating in M&A can be tricky.

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Topics: Selling Your Practice, Acquisition, Buying & Selling, State of the Market

Process Overview: Selling Your Business on the Open Market

Posted by FP Transitions on Aug 19, 2020 9:12:05 PM

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Selling your business is a big decision. The good news is that demand is high and you have many options for structuring your exit. You also have many places to conduct your buyer search: reaching out to your professional and community networks, pursuing unmonitored listing bulletin boards, entertaining an unsolicited query on the table, or engaging in an open-market search. Most of these strategies result in having to navigate the process alone.

Buyers who have bought businesses before have the advantage of prior knowledge of the acquisition process, but as a seller, you often only get one shot at it. It’s important to understand what to expect. What follows is an overview of the process for selling your business through the FP Transitions Open Market.

PHASE ONE: Finding the Best Match

1. Establishing Value (vs. Price)

Business value and selling price can be two different numbers. A comprehensive and professional valuation will provide a fair foundation for your selling price that considers revenue, expenses, client demographics, geographical location, and much more.

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Topics: Selling Your Practice, Open Marketplace

Considering Key Staff During the Sale of Your Business

Posted by FP Transitions on Jul 30, 2020 1:25:00 PM

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It’s hard to keep secrets in a small office. The rooms are tight, the walls are thin, and it’s just a matter of time before everyone knows everyone else’s business. Even when an owner has quietly decided to sell their practice, they should assume that staff members will eventually find out (if they haven’t already). In our experience, it’s best that employees hear the news from someone they trust: the owner.

Prospective sellers are often reluctant to speak to staff members about their exit plans because they aren’t sure how the selling process will pan out and they don’t know how the staff will feel about the change. While it’s important to be sure of your decision before announcing your plan, looping your staff into the process can increase your success and can even help shape the structure of your sale.

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Topics: Selling Your Practice, Deal Structure, Buying & Selling, Building Your Team, "Buying, Selling, and Valuing Financial Practices"

Marketplace Activity : Recently Sold Practices

Posted by FP Transitions on May 4, 2020 10:46:00 AM

Even with market volatility over the past few months, the marketplace for financial advisory businesses has remained strong. FP Transitions is pleased to announce the recent sales of financial services businesses in the following areas :

  • Palm Beach, FL  |  $6,000,000
  • Houston,TX  |  undisclosed
  • North Carolina  |  undisclosed
  • Rhode Island  |  $1,500,000
  • San Francisco Area, CA  |  undisclosed
  • South Carolina  |  $3,600,000
  • Sacramento Area California  |  undisclosed
  • Atlanta Area, GA  |  undisclosed
  • Miami Area, FL  |  $350,000
  • Lafayette Parish, LA  |  undisclosed
  • Rhode Island  |  $700,000
  • Houston, TX  |  $1,100,000
  • Chicago Area, IL  |  $120,000
  • Northwestern, TX  |  $450,000
  • Boston Area, MA  |  undisclosed
  • Florida Panhandle  |  undisclosed
  • Tampa Area, FL  |  $750,000
  • North Carolina  |  $450,000
  • Michigan  |  $1,200,000

VIEW CURRENT LISTINGS HERE 

LIST YOUR PRACTICE WITH FP TRANSITIONS

State of the Market: Outlook for Advisory Firm Valuations [Webinar Replay]

Sold announcements include all closed third-party transactions facilitated by FP Transitions, including private listings, pre-arranged matches, and those listed on the open market. 

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Topics: Selling Your Practice, Acquisition, Buying & Selling, SOLD

Offers in the Mail

Posted by David Grau Sr., JD on Apr 30, 2020 1:13:11 PM

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For many financial advisors, it has become commonplace to receive unsolicited offers in the mail. The offers to buy practices usually promise a competitive valuation and purchase price, great terms and future opportunities, and are backed by private equity, bank financing, or other cash reserves. More than anything, these letters bring hope, choices, and affirmation that an advisor has built something valuable and transferable.

Some of these letters arrive from well-known firms but many are from smaller, previously unknown suitors whose marketing strategy is to grow rapidly through practice acquisition. The advisors we talk to on a daily basis tell us about these letters dismissively at first, but they also say they keep the letters for future reference–just in case. Hope and choices are good things, even if they’re not needed today.

It is always flattering to be recognized, wanted, and valued, even if your name comes from a purchased mailing list. The more important point may be that these letters get many independent advisors, like you, thinking and wondering about the future. Questions arise: What is my value? What options do I have? Is this the best offer, or maybe the only offer, I’ll ever get? Can I sell my practice and keep working, given that I’m not ready to fully retire right now?

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Topics: Selling Your Practice, Acquisition, Due Diligence, Buying & Selling, Press Release, Transactions