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The value of your practice is determined by many factors, some obvious, and some not so obvious. And the degree to which some aspects impact your value more largely depends on the reason you’re valuing the business in the first place.
Whether you’re considering acquisition, onboarding new talent–or new owners–, monitoring annual growth, or getting ready to sell, these ten factors have the most significant impact on the value of your business. Focus in these areas can make a major difference in your book’s sustainability and its eventual purchase price when transition time arrives.
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Topics:
Business Growth,
Business Value,
Buying & Selling,
Sustainability,
Benchmarking,
Valuation & Appraisal
Experienced business owners recognize the importance of tracking and monitoring their firm's value over time. They know this business is one of their largest assets, and by measuring and monitoring it, they are enabling its growth, protecting its value, and ensuring a sustainable - and profitable - future. Understanding value and monitoring it over time is the starting point for every business plan: organic growth, acquisition, succession, talent recruitment, everything.
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Topics:
Continuity Planning,
Succession Planning,
Continuity,
Sustainability
If you are preparing to become the successor of an RIA firm, you may have a lot of questions and concerns about how to negotiate the best deal and what lending options are available to help you finance the succession.
To help you answer these questions, Alicia Chandler, President and Susie McEuen, Strategic Markets Vice President of Oak Street Funding sat down with FP Transitions’ Director of Valuations, Aaron Wells, and CFO, Eric Leeper, to share their insights and tips on what successors need to know.
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Topics:
Continuity Planning,
Succession Planning,
Deal Structure,
Continuity,
Sustainability
Often used interchangeably, the terms Continuity Plan and Succession Plan refer to very different business planning elements. Continuity plays an essential role in defining what happens upon a “triggering event”– sudden absence, disability, death or otherwise, while succession refers to an intentional plan that brings multiple generations of owners into the business, typically over 10-15 years, to carry it forward for decades to come. We refer to this goal as sustainability.
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Topics:
Continuity Planning,
Succession Planning,
Continuity,
Sustainability
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For our clients, the courses of action may differ, but growth is the number one priority. The goal could be to grow and then sell it to a third party for maximum value. Alternatively, the aim could be to create a sustainable enterprise capable of supporting a gradual transfer of ownership, leadership, and responsibility to an internal successor.
Many advisors arrive on our doorstep using terms like “silo” and “ensemble” to describe to us what they believe they have built. However, these terms merely describe the organizational structure, which is just one facet of the strength of an independent advisory enterprise. These terms are not sufficient for diagnosing ALL structural elements needed to support a sustainable, profitable, valuable enterprise in this highly-regulated and sometimes complex industry.
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Topics:
Business Growth,
Sustainability,
Enterprise
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Great opportunity comes often with great risk. But just as importantly, and far more prevalently, everyday challenges wear on us, too. How many times have you had the same conversation with a client about opening that 529? Or upping that 401k contribution? They want to do it – so they say – but they keep showing up for meetings without having done it.
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Topics:
Succession Planning,
Business Value,
Transition Plan,
Continuity,
Sustainability,
Leadership,
Valuation & Appraisal,
KPI,
marketing,
valuation
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Editor’s Note: We originally posted this article by Colleen Jordan Hallinan in 2018. Since then, the need for business owners to focus on building the right team in order to grow and establish sustainability has only increased. And so, five years later, Colleen’s guidance on nurturing your team, evolving your own role, and adjusting your mindset to cultivate a stronger, more capable group of professionals is just as relevant.
Successful, ambitious, and conscientious advisors ask questions like: How do I create next-level growth? What will it take to build a firm that delivers an extraordinary experience to my clients and their families? How am I going to achieve my own next-level life?
The answer starts with another strategic question: What has to happen to give you the freedom to focus on precisely those aspirations?
Your catalyst for growth in all three areas lies in the talents of your team. Make your A players your #1 priority and you’ll have an alchemy that expands your available time and transforms exhaustion and obstacles into more space and energy.
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But it doesn’t come without a cost. The cost is personal sacrifice of current habits, beliefs, ego, and behavior, plus an investment of more time now to blend together the ingredients for that alchemy. Your results will come from your ability to:
- let go and stay focused on the big picture,
- place yourself in service to your team, and
- treat them like your best clients.
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Topics:
Succession Planning,
Business Growth,
Next Generation,
Sustainability,
Building Your Team
Brown, Caleb. Successful Hiring for Financial Planners: The Human Capital Advantage. Coventry House Publishing, 2018.
Many small financial advisory firms don’t have a Human Resources Department. So when it comes time to seek out, hire, train, and develop employees, those tasks usually fall to the owner. They must figure out where to find candidates, what to ask in an interview, how much to pay, how to set up a training plan, and how to keep them engaged and motivated. That research takes valuable time away from the owner’s other obligations and productivity.
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Topics:
Next Generation,
Talent Recruitment,
Sustainability
"Think about those future goals."
"Hold steady and don't react to the market."
"Remember, we have a plan and it's still well on track."
Throughout the market roller coaster of the Pandemic and now with 2022 rearing its head, advisors are getting used to coaching clients through market volatility. What matters most in these scenarios are two things: first, a trusted relationship between advisor and client, and second, preparation and education to navigate these emerging challenges.
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Topics:
Succession Planning,
Selling Your Practice,
Business Value,
Sustainability,
Trends
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Designing a sustainable firm is something that requires intentionality. For most advisors, this is always the goal, but having time to monitor your progress and course-correct is simply overwhelming. It gets shelved in the back of our brains, and its not until something unexpected crops up when we realize its time to revisit our goals.
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Topics:
Continuity Planning,
Organizational Structure,
Entity Structure,
Sustainability,
Business Operations
