- Establish your timeline
Are you looking to sell within a year or over the next few? The longer the horizon the more choices you’ll have and the more you can monetize and provide for a smoother transition for your clients.
- Estimate your value
Don’t assume the ratio your friend got for his practice will be the same as yours. Getting a third party valuation (around $1,000) at the beginning of the process is essential for both you and potential buyers.
- Get familiar with M&A deal structures
Sellers are financing less and less. There has been an 1100% increase in external financing for advisory acquisitions since 2013 but sellers are still expected to finance 20% to 30% of the deal and have a reasonable claw back. Understand the differences of common structures and requirements from the buyer’s lender regarding structure requirements.
- Put yourself in the buyer’s shoes
Think of your practice from your future buyer’s perspective. Having your organizational chart, updated financials, client information including client servicing model, and how you will be helping in the client transfer and retention.
- Have a conversation with a M&A specialist
There is a cottage industry helping advisors with selling and succession. Most of the larger broker dealers and custodians have support experts willing to help you for free. Advisorbox also provides free consultations to walk you through the steps of selling, structures, qualified buyer matchmaking, buyer financing, pitfalls to avoid, and assists in making the process a lot easier for you.
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