TRANSITION TALK

Acquisition strategies are varied and diverse; how an advisor or a firm pursues acquisitions will depend on their business model and philosophy. While the approach to acquisition should be personalized, it is a mistake to do it alone. In addition to the successful transactions presented in this report, FP Transitions works with many advisors who have endured failed sales or stalled deals.

The story of a failed transaction often begins with one or both parties hesitating to hire a mediator, the perception being that their deal is “simple,” and that buyer and seller can save money if they do it themselves. The information we gather from these clients about their failed sales gives our consultants broader perspective on what works and what doesn’t in an evolving marketplace. When we combine this information with the data gathered from successful deals, it is clear that investing in a mediator improves results for both buyers and sellers in terms of success rate, speed, and value.

One misconception advisors often share with us is the belief that one-on-one negotiations are easier and brokers will just get in the way of a personal connection between buyer and seller. This perception is understandable, as it is essential that buyer and seller have a mutual affinity and have aligned interests in order to transfer and retain client relationships after the deal is done. However, mutual affinity is not sufficient to get buyer and seller over basic negotiating factors, such as valuation, deal structuring, and tax allocation of the purchase price. These are complex topics where a mediator can provide expertise and perspective to both sides and advance the deal forward.

Financial services is such a regulated industry, with the added complexity of requiring a long transition, that it is common for a sale to get bogged down in “paperwork.” So, while each party does need representation, there also needs to be a knowledgeable and neutral mediator who can be responsible for keeping everyone on track, offer solutions, and has data to show why one side’s objection is or is not valid.

FP Transitions is pleased to announce the sales of financial services businesses in the following areas during the month of July:

• Seattle, WA  |  $780,000
• Central Coast New Jersey  |  $630,000
• Fresno Area California  |  undisclosed
• Kansas City Area Missouri  |  $1,300,000
• Southern Illinois  |  undisclosed
• Portsmouth, RI  |  $2,450,000
• Orange County California  |  $260,000
• Philadelphia Area Pennsylvania  |  $460,000
• Central Colorado  |  $880,000
• Upstate New York  |  undisclosed
• Philadelphia Area Pennsylvania  |  $1,770,000

VIEW CURRENT LISTINGS HERE 

VIEW COMPLETE LIST OF PRACTICES SOLD 

LIST YOUR PRACTICE WITH FP TRANSITIONS

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. 

FP Transitions is pleased to announce the sales of financial services businesses in the following areas during the month of June:

• Northern New Jersey | $395,000

• Colorado | undisclosed 

• Chicago, IL | $185,000

• Georgia | $380,000 (partial book sale)

• Boise, ID | $550,000

VIEW CURRENT LISTINGS HERE 

VIEW COMPLETE LIST OF PRACTICES SOLD 

LIST YOUR PRACTICE WITH FP TRANSITIONS

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. 

FP Transitions is pleased to announce the recent sales of financial services businesses in the following areas:

FP Transitions is pleased to announce the recent sales of financial services businesses in the following areas:

Everyone has a unique vision of their future; we’re all trying to forge a path with our careers to that end goal where we can take a big breath and simply enjoy the life we’ve earned. While we might have an idea of the specific journey we will take, it’s important to remain open to alternate routes and unexpected shortcuts along the way. The hardest step on this journey for most is that which takes them out of the professional world they’ve been a part of for many years.

Unique goals and unique journeys require a creative strategy. For financial advisors, the Sell and Stay® path offers flexibility and freedom for an exit from the industry. There are advisors in the industry who have built a team of advisors with next generation owners and have built an internal transition into the sustainability of their business. The majority of our industry, however, is still made up of single-owner practices. Luckily, Sell and Stay® offers them the option of a similar exit path.

The vast majority of today’s independent advisors only consider the option of selling to a third-party when it is time to retire or significantly throttle back as a last resort. Many advisors prefer a path with internal successors that allows them to exit gradually while building a strong, sustainable business. Many of these same advisors, however, come to realize too late that that process takes a fair amount of time, skillful execution, and next generation talent. As a result, a third choice emerges: that of attrition, which for most advisors is less of a choice and more of a default–keep working, enjoy the income, and let the practice slowly wind down if no better option emerges.

Attrition, however, involves a gradual drop off of clients, revenue, and value. It does not consider the future of all of the clients who have relied on their advisor for years. To avoid attrition, advisors should consider a sale to a third-party and exit in a professional and contemplative manner before any value is lost and clients are left to find a new advisor on their own. The brief exploration that follows can help to remove some of the mystery and many of the myths around the exit planning process and make it a higher priority choice. 

This external sale process is one of several “exit plan” paths, but it is often the best (and most lucrative) choice for certain advisory businesses–especially those who are otherwise facing attrition. Selling your practice to a third-party is the fastest of all the exit strategies, and something to consider depending on the circumstances and your needs. In most cases an external sale can produce a more liquid transaction with substantial, non-refundable down payments of 30% to 80% of the selling practice’s value. In the current sellers’ market, obtaining fair market value on very competitive terms is well within reach of the average selling practice owner. Setting up a practical and successful exit plan is about structuring a deal that works well for everyone.

FP Transitions is pleased to announce the 2019 sales of financial services businesses in the following areas:

• Richard Metro Area, VA • $520,000
• Central Illinois • $390,000
• New Haven Area, CT • $2,000,000
• Colorado • $200,000
• Eastern Pennsylvania • $610,000
• Minneapolis Metro Area • $700,000
• Northeastern Wisconsin • $190,000
• Atlanta Metro Area • $330,000
• Eastern New Jersey • $1,500,000
• Eastern New York State • $300,000
• New York, NY • Undisclosed
• San Francisco Bay Area • $1,100,000
• Pacific Northwest • $950,000

VIEW CURRENT LISTINGS HERE 

VIEW COMPLETE LIST OF PRACTICES SOLD 

LIST YOUR PRACTICE WITH FP TRANSITIONS

• Central California • $1,500,000
• Southeastern Connecticut • $800,000
• Chicago, IL • $317,000
• Northwestern US • $1,000,000
• Eastern New York State • $410,000
• Northwestern Wisconsin • $340,000
• Northern Alabama • $3,000,000
• Columbia Metro Area of South Carolina • $1,360,000

VIEW CURRENT LISTINGS HERE 

VIEW COMPLETE LIST OF PRACTICES SOLD 

LIST YOUR PRACTICE WITH FP TRANSITIONS

Building a sustainable business and incorporating new talent into your ownership structure is a process that takes planning and monitoring. But it’s a process that–when done correctly–can yield incredible satisfaction, growth, and value. A process with so many moving parts including multiple parties and expectations is bound to see some bumps. Sometimes those bumps can necessitate larger course corrections in order to keep the plan on track.

There are a variety of situations that can cause a larger adjustment to your succession plan–whether they’re driven  by G1 or G2, positive or negative, preventable or not, and expected or not. Below is an excerpt adapted from a section of Succession Planning for Financial Advisors, written by FP Transitions Founder and President David Grau Sr., JD.

If Founder Plans Change

The whole purpose of a succession plan is to help your business outlive you, so count on this being a somewhat lengthy process. While some plans on paper may go out 20 or more years, they are implemented tranche by tranche, with planned opportunities for reassessment and course changes or adjustments. At a minimum, plan for annual valuations to monitor value, annual benchmarks using that valuation data to track operational numbers, and plan adjustments every five years or so. Depending on the size of the business, the number of owners, and the goals, some businesses and firms prefer more frequent maintenance so that the course corrections are more subtle.