Selling or Merging a Financial Advisory Practice:
What you need to know.

Over the last 15 years the amount of money advisors can get for their business has risen astronomically. An example of this rise is as recently as 10 years ago, Morgan Stanley was quoted to have increased their deal to pay an advisor up to 100% of trailing 12 month production with 75% being cash and the remainder in equity. Today, these deals at the Wirehouses can top 350% including back end bonuses. For Independent advisors, business valuation multiples have also grown from nothing, when an advisor would just retire, to up to 2-3 times revenue.

However, most advisors haven’t spent the time and taken the steps to take advantage of today’s all-time high valuations that seem to be approaching a “bubble-like” status. In fact fewer than 20% of advisors have a succession plan. Succession planning for advisors may be one of the most talked about topics at conferences, and yet the average age of advisors keeps going up and the percentage with a succession plan doesn’t change.

Finding the Perfect Fit

The unfortunate reality for most advisors is they fall into one of two categories. The first is an employee of a Broker/Dealer who won’t get a fair valuation for their business because of the restrictions of their B/D. Their only choice is a sunset provision which is taxed as ordinary income. The second is an independent advisor who has the ability to sell their business to anyone with the advantage of capital gains rates, but can’t find the right successor and so they don’t implement anything.

Studies indicate a longer term strategy for selling your practice which is implemented years in advance, can increase the value of your business, enhance the service you provide to your clients and dramatically increase money in your pocket. If you are within 15 years of winding down or selling your business, Bridgemark Strategies will work with you to make sure your practice is best positioned to maximize its value while providing you the comfort that your clients are being taken care.

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