As a small business owner, you are a go-getter with a well-thought-out plan for your company. The opportunity to grow and expand your company via acquisition and innovative marketing efforts is the next logical step in your plan. Or do you prefer a different path?  One that involves more sand between your toes and less ink on your fingers. You are ready to pass your small business onto the next generation and shift your focus to more relaxing endeavors. But there is so much involved in the process of buying and selling businesses. The integration of technology innovations in the world of mergers and acquisitions (M&A) is striving to revolutionize M&A deal-making processes. 

While financial advisors get paid for helping their clients make sound financial decisions and plan for retirement, they themselves are also faced with these same challenges in regards to their own practices. Premature death or accident are an unpopular topics under any circumstances, but nevertheless, they are subjects that need to be addressed so that loved ones and business interests are taken care of after death.

The creation of a succession plan for your business should not be considered an optional exercise. It’s a task that owners and executives must complete for the sake of their employees and shareholders. Think of it in terms of establishing a legacy for yourself.

Expansion through acquisition looks great on paper, but there are a lot of moving parts to address before it can become a reality. The most obvious question is, “Where is the money going to come from?” There are a series of steps required before this can be answered.

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.

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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.

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 business 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.

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.

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? Many Financial Advisors make preventable mistakes in succession planning because of common myths giving them a sense that they can deal with this topic tomorrow. Here are the most commonly believed succession planning myths that hold business owners back from effectively tackling this important topic:

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.