For many financial advisers, selling their firm is something they think about long before they are ready to make a decision.
Perhaps you have been running your business for many years and are starting to think about what the next chapter looks like. Maybe you are approaching retirement, want to reduce your responsibilities, or simply feel that the time is right to explore your options.
Or perhaps you have only had the thought in passing:
“I wonder what my business is worth?”
“What would happen to my clients if I sold?”
“Could I sell but still stay involved?”
“Who would I sell to?”
If any of these questions sound familiar, you are not alone.
And importantly, thinking about selling does not mean you have to sell.
The first step is simply understanding what your options are.
Start with the bigger picture
Before thinking about buyers, valuations or deal structures, it is worth taking a step back and thinking about what you actually want from the future.
Ask yourself:
- When would I ideally like to step away from the business?
- Do I want to retire completely, or would I like to remain involved?
- How important is it that my clients remain with the business?
- What would I want to happen to my team?
- Do I want the business to continue growing?
- Would I consider a phased exit?
- What would a successful outcome look like for me personally?
There is no right or wrong answer.
Every IFA business owner will have different priorities, and understanding yours is an important starting point.
What is your business worth?
It is understandable that this is one of the first things you want to know. However, valuing an IFA business is about more than simply applying a multiple to a figure.Factors such as recurring income, profitability, client demographics, growth, recurring revenue quality, the strength of the team and the structure of the business can all influence its attractiveness to a potential buyer.Getting a realistic understanding of your firm's value can help you decide whether now is the right time to sell — or whether there are things you could do to strengthen the business first.
What is your business worth?
It is understandable that this is one of the first things you want to know. However, valuing an IFA business is about more than simply applying a multiple to a figure.
Factors such as recurring income, profitability, client demographics, growth, recurring revenue quality, the strength of the team and the structure of the business can all influence its attractiveness to a potential buyer.
Getting a realistic understanding of your firm's value can help you decide whether now is the right time to sell — or whether there are things you could do to strengthen the business first.
What would happen to your clients?
For many advisers, this is one of the biggest considerations. You have spent years building trusted relationships with your clients. They are not simply numbers on a spreadsheet. If you were to sell, you would understandably want to know who would look after them and how the transition would work. When considering your options, think about the type of buyer you would feel comfortable handing those relationships to.
Would they share your approach to financial planning? Would there be continuity for clients? Would you be able to introduce the new owner gradually? These are all questions worth asking before you enter into any discussions.
What about your team?
Your employees are another important part of the picture. If you have built a strong team around you, you may want reassurance that they will have a future within the business. Consider what you would want for them and what type of organisation would provide the right environment for them to continue developing. A sale does not necessarily have to mean everything changes overnight. Depending on the buyer and the structure of the transaction, there may be opportunities for continuity and a gradual transition.
You don't necessarily have to walk away
One common misconception about selling an IFA firm is that selling means immediately stepping away. That is not necessarily the case. Depending on your objectives, there may be different ways to structure a transaction.
You might want to remain involved for a number of years. You might want to gradually reduce your responsibilities. Or you may be ready to hand over completely. Understanding the different possibilities can help you decide what feels right for you.
Is now actually the right time?
This is perhaps the most important question of all. Just because you are thinking about selling does not mean that you should sell today. Sometimes, the best next step is to spend some time preparing the business and making sure it is in the strongest possible position. That could mean reviewing your recurring income, improving processes, strengthening your management team, addressing client concentration or simply getting your finances and documentation in order.
Starting the conversation early gives you more choices.
You can understand your valuation, identify potential buyers and consider what you would like your exit to look like — without having to commit to anything.
You don't have to work it all out yourself
If you are at the stage of “I'm thinking about selling, but I don't know where to start,” that is completely understandable. Selling a financial advice business is not something most business owners do regularly. There are financial, commercial, legal and personal considerations to work through, and it can be difficult to know which questions you should even be asking.
That's where an initial conversation can help.
At Superbia Group, we work with IFA business owners to understand where they are today, what they want from the future and what options may be available to them.
You do not need to have decided to sell.
You do not need to know what your business is worth.
And you do not need to have a timescale in mind.
Sometimes, the most useful first step is simply talking through your situation with someone who understands the market.
We can talk through your circumstances, answer your questions and help you understand what the next steps could look like — whether that means preparing your business for a future sale or exploring opportunities now.
There is no pressure to make a decision. The first step is simply a conversation.