All businesses, regardless of type and size, have an organizational structure that determines how the company is managed on a daily basis. While they may have all the right advisors in place for the current state of the business, it is important for organizations to make sure they have a plan in place to keep the business thriving long-term, regardless of who is at the helm. Succession planning, as both a concept and a strategy, establishes a framework for identifying and developing next-gen talent to replace the founder when she/he exits the business.
Recent posts by David Grau Jr.
8 min read
10 min read
There are multiple reasons to believe that the number of mergers and acquisitions in the wealth management space will be high in the next five to ten years. To start with, over 50% of active financial advisors are over age fifty. Many of them will be looking for an exit strategy. Combine that with the fact that very few advisors have a succession plan and the increased deal volume year-over-year recently and it is reasonable to expect more consolidation short and long-term.
6 min read
There are a wide variety of methods and approaches that can be used when determining the value of a financial services business. There are three valuation methods that are commonly considered. In many instances, one of these valuation methods may suffice, but depending upon the circumstances, it can be beneficial to use a combination of these valuation methods to achieve a detailed and accurate representation of the firm’s fair market value.
12 min read
What Exactly Is M&A?
The term "mergers and acquisitions" (M&A) broadly refers to the process of one company combining with another; however, the method and legality of how these terms are processed are slightly different.
Topics: Acquisition Blog
3 min read
As most business owners will attest to, starting and running a business involves a combination of conviction/passion, perseverance, stress and personal sacrifice. Owners invest a significant amount of themselves and capital into running these businesses, and as a result, most have a substantial portion of their net worth tied up in their business. The vast majority of owners/founders we've worked with here at Succession Resource Group have communicated that their business is not just a valuable asset, but their most valuable asset. So, why do so few owners have an answer for their key stakeholders about when they will retire from their business and who will succeed them? Because the common myths of succession planning give them a sense that they can or should be dealing with this topic tomorrow (in the proverbial sense). Here are the most common myths that our clients come to us with that hold owners back from effectively tackling this important topic:
2 min read
Developing a succession plan is a great tool to ensure your business continues to grow while you eventually work less and begin to realize the value of your business. But, a key piece of developing a plan for you and your business is having the right successor. For some, this person may be an existing employee or junior partner, but for the majority, the solution is to find a peer to sell the business to. The sale often involves a long-term gradual work-out period providing you with an exit strategy that lets you leave your business on your terms. So, where do you find a succession partner? And how can you do it with paying a hefty commission to a broker? Read on.
Topics: Acquisition Sellers Succession Plan Blog
2 min read
What would happen to your business, your clients and the value of the company, if something where to happen to you suddenly? Do you have a plan and systems in place to ensure your business will carry on until you return? Or, a plan to ensure the business continues under someone else’s leadership if you cannot return?
2 min read
To start with, let's define the term "Continuity Planning."
2 min read
It may sound contrarian, but if you are interested in buying a business, do yourself a favor and never ask the question, “Can I buy your practice?” Experienced advisors that have bought a business before know this to be true, and the reason is simple. The question ignores the fundamental realities of practice acquisition in the financial services industry. In the financial services business, the person who says “yes” to the question, “do you want to sell?” is not necessarily the type of person from whom you want to buy a practice.
Topics: Acquisition Buyers Blog
2 min read
If you asked us five years ago about financing the acquisition of an advisory practice in the financial services industry, there would not have been much to talk about. Until recently, almost all deals were done using a combination of buyer’s funds and seller financing. Bank financing was not a viable option for most deals because lenders generally struggled with the collateral on the loan – an advisor’s most valuable asset in their business is the client relationship and cash flow those relationships produce. Before the market drop in September 2008, some advisor buyers were able to leverage home-equity lines of credit or large business lines of credit, but most had to use personal funds to finance their deal, which priced many otherwise qualified successors out of the market. Until recently, the typical deal for advisors with less than $5,000,000 in annual revenue involved 20-40% cash down from a buyer, with the balance seller-financed over 4 to 5 years at 5-7% interest. That is changing, and the results seem to be good for everyone involved in the deals.