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.

Over the next 10 years, 4.5 million businesses with over $10 trillion in value will transition into new hands via mergers and acquisitions. A major source of this shift is the retirement of baby boomers - 10,000 of whom turn 65 every single day. It is therefore more important than ever that business owners keep a pulse on their valuation, and to value their businesses annually. This can help business owners identify weaknesses in their business, make better financial decisions, and provide them with an opportunity to implement informed strategies for improvement moving forward (among other benefits). Not only will valuations help business owners run their business better in the short term, understanding the value of their firm will help them be prepared to sell the business and understand what it is worth when the time comes.

Mergers and acquisitions are team activities. Surgeons don’t go into the operating room without nurses and anesthesiologists. Business owners shouldn’t enter into an agreement to sell or merge their business without M&A support.

Selling your business is not only a difficult decision to make, but it can often be a costly one if not done correctly and objectively. And while the particular path you choose for your exit will inevitably vary, it is important to understand who will help you in that process, in what capacity, and what responsibilities you have as an owner. If you are thinking of selling your business or planning to sell in the future, here are the costs you should consider.

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: