Advisorbox believes sellers should be as educated and prepared as possible about their options, the process, deal structures, and the valuation process. Our BluePaper on “Succession and Selling” covers these topics and more. As an advisor advocate however, we also like posting quality M&A advice from other firms we work with on a regular basis. Our friends at SRG has developed a Seller Readiness E-Book with different seller checklists we recommend checking out.
Know your numbers checklist
The sale of any business comes down to the buyer’s expectation of a return on their investment, so understand your financials and start preparing materials for due diligence.
- Registered Reps: Put GDC on your P&L along with line items for recurring and non-recurring revenue sources and make BD costs line items as COGs.
- Review your profit and loss statement, eliminate non-essential or personal expenses.
- Separate owner’s compensation (owner’s salary, insurance, payroll taxes, retirement plan contributions, etc.)
- Review debts of the business and long-term obligations a buyer would need to assume, including things like your lease.
- Verify total assets under management, including a breakdown f where assets are held and what types of products those assets are in.
- Prepare a pro forma P&L for any potential purchaser showing what expenses would look like going forward.
- Review historical revenue growth rates (explain anomalies).
- Review revenue sources for the last twelve months and determine if revenue is transferrable.
- If you sell alternatives that will take years for a liquidity event or have annuities with long surrender charges, be ready to provide data and explain.
- Be able to explain any uniqueness in your business
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