Kristen Grau: Hello. We’re going to wait a few moments to let everyone jump on, and then we’ll get started. Looks like we have most of you today, so welcome to today’s session, “Merger or Sale: Finding the Right Path to Your Exit.” Over the next hour, Nicole and I will walk you through how to think clearly about one of the biggest decisions you’ll make as a firm owner: whether a merger or a sale is the right path to exit your business.

Before we get into the framework, quick context on Succession Resource Group. SRG officially began in 2012, but some of us have been doing this for much longer. We’re a team of 23 full-time specialists with multiple credentials and an average project-lead tenure of over 12 years. This matters because you want confidence that the team you hire has been through this before. And because mergers and sales touch valuation, tax, legal structure, and people all at once, you don’t want four different consultants who don’t talk to each other. You want one team that already speaks all four languages. That’s Succession Resource Group.

Just as important, what we actually do spans the full life cycle. We complete valuation work, including expert witness and divorce valuations, equity design and compensation planning, entity support, buy-side and sell-side deal structuring, succession planning, mergers, and deal support. If it touches ownership transitions, we’ve built a service line for it. We’ve also picked up outside recognition for our expertise from ThinkAdvisor, Wealth Management, and Inc. Best Places to Work. The people in this room don’t just talk about these things, we live them.

A couple of quick introductions before we dive in. I’m Kristen Grau. I’m a certified public accountant, a certified valuation analyst, and a Certified Exit Planning Advisor. I serve as Executive Vice President here at Succession Resource Group, leading the sell-side transactions and making sure the advisors and firm owners we represent actually get heard and protected through a process that can otherwise move fast around them. Joining me today is my colleague, Nicole Frey. Nicole is a Certified Financial Planner and our Director of Team Solutions. She leads mergers and entity consulting work, and her background in law and financial services brings a depth of contracts, entity structure, and legal process that matters enormously when two firms actually decide to combine. Nicole will take you through the merger path later in this session, so you’ll hear directly from her shortly.

For now, let’s clear the housekeeping. There is a Q&A box to ask any questions as we go. Nicole and I will be watching it, and we’ll get to as many as we can live. Anything we don’t cover, we’ll follow up with you directly after the session. You’ll also get today’s recording by email within 24 hours, so you can relax and actually listen. The deck will be available if you’d like a copy. Our team will contact you after the webinar to address any questions and help you determine your exit path. Lastly, don’t forget to register for our upcoming webinars, which we’ll share in the chat.

To help us understand who’s in the room today, we’d love it if you could answer a few short polling questions that will show up on your screen in a moment. We’ll wait a couple of seconds for you to answer before I dive in. It helps us develop the content for you and better tailor today’s presentation.

While you’re completing that poll, here’s how we’ll spend our time together. First, we want to help you understand what choosing the right exit path looks like, and the actual decision-making framework between a sale and a merger, not just a pros-and-cons list. Then we’ll walk you through what a sale path looks like in real depth, and help you tell whether a sale goes well or turns into a headache. After that, Nicole will take you through the merger path at the same level of depth. Then we’ll bring it all together and compare the two directly, including benefits and trade-offs, side by side, so you’re not just choosing which exit path is right, but seeing how to take it from an abstract concept into actual application.

So let’s dive in. Before defaulting to a particular exit path without full information, we want you to actually understand the difference between the two. And before we do that, we need to be on the same page, because “merger” and “sale” get used loosely in our industry, and that causes real confusion. A merger is a combination of two or more businesses, often with shared ownership, completed into a single business unit. Two firms, one new entity, shared control, shared profits going forward. Mergers tend to combine operations, cut duplicative costs, and create growth you may not be able to get alone. Sometimes a merger can even reduce competition, geographically or otherwise. A sale is different. It’s when one business purchases another, and ownership and control transfer entirely to the buyer. As a seller, you’re out of daily operations. A sale tends to prioritize immediate liquidity and a clean reduction in risk.

So how do you know which option actually fits you? You’re probably a strong merger candidate if you genuinely want to keep working for another 5 to 15 years, if you’re comfortable sharing leadership and decision-making, and if your firm can easily adapt its processes and technology, because merging means blending two operating systems into one. Alternatively, you might be a strong sale candidate if you want a clear transition and a defined end date, if you’re ready to meaningfully reduce or eliminate your ongoing workload, or if you’d rather have a clean transfer of ownership than an ongoing shared decision-making relationship.

Notice that neither description mentioned firm size or revenue. That’s intentional, and it’s where most advisors get it wrong. They assume bigger firms merge and smaller firms sell. That’s not how it works in practice. If you take away nothing else today, take away this: the right path depends on your objectives, not your size.

Why does the exit path you choose matter so much? Because this one decision touches everything else. It touches your value, because a merger and a sale get valued and, more importantly, paid out differently. It touches control, how much say you have in decisions after the ink is dry, if any. It touches your timeline, since some paths wrap up in months and others keep you involved for years. It touches how your clients experience the transition and the message conveyed to them. It touches whether your staff stay or go, and in what capacity. It touches how the transaction gets taxed, and the ways to mitigate some of those taxes. And it touches what your duties look like after closing. Your exit path isn’t a decision you make once and forget. It shapes years of your life afterward, which is exactly why we want you to make it deliberately, not reactively.

You’ve already heard me say the exit path isn’t about size, it’s about objectives. I’ll say it once more, because the lens that follows is important. A merger isn’t just a smaller sale, and a sale isn’t automatically the better move. The right path depends on what you want your role, your clients, your team, and your legacy to look like once the transaction is done. With that in mind, let’s start with the sale path. This is the one most advisors think they already understand, but by the end of this section I think you’ll see there’s more structure to doing it well than most people assume.

Here are the basics of a sale roadmap. We’ll go through each item in more detail shortly, but I want you to notice that all or most of these five steps happen before you ever sign anything. The fifth step happens after close, and only Step 3 is the negotiation step. A successful sale doesn’t begin once you get an offer. It begins with the preparation in Step 1, often a year or more before you’re even talking to anyone. And it doesn’t end at closing either. The best transactions are measured by how smoothly clients and staff come through the other side, which happens entirely in Step 5. If you follow this order, you not only maximize the value you receive, you minimize the surprises that blow up deals late in the game.

Step 1 is getting the firm ready. It starts with clarifying your objectives, personally and professionally. What do you actually want your life to look like in the next three years? What does success look like for your clients, and how can you help them get there confidently? How will your team continue to grow? If you don’t know the answers, you can’t evaluate any offer against them. Clarifying those objectives up front is what gets you to Step 5 successfully.

Then it’s about being data ready, and honestly, this is the step most advisors underinvest in, because it doesn’t feel like progress. There’s no buyer yet, no offer, nothing exciting happening. But this is where true value surfaces, and where deals get won or lost. Organize your historical and current financials and gather specific and aggregate client data from sources a buyer can verify. Sloppy books don’t just slow due diligence, they cost you money, because uncertainty and disorganization get priced as risk.

Third, value your firm. Pay for a certified valuation report so you understand your value, what’s driving it, and what’s putting it at risk. Do this well before you’re sitting across from a buyer who already knows these numbers better than you do. You should be driving those conversations. And fourth, streamline your processes. Reduce how much of the business runs through you personally so it keeps running smoothly without you. If you’re a solo advisor, document your processes and use systems. The more transferable your business and client information is, the more perceived value there is. Every process tied directly to you, or left undocumented, is a discount the buyer will find. Don’t let them. Get these four items right and you’ll walk into every later conversation from strength instead of playing catch-up.

Step 2 is finding the right buyer, and I want to push back here, because most people think this is a sourcing problem. It’s not. It’s a screening problem. There are always going to be buyers out there. I’m sure you get letters from them every day. The work isn’t finding the buyer, it’s figuring out which buyers are actually right for you, and that looks different for every firm. The right buyer brings a few specific things: culture and a service model, operations and a credible plan for your team, continuity for your clients, and, most importantly, capital to support how your clients will grow going forward.

Screen every buyer against the same criteria. This is critical. So many people say, “I found this buyer and did this thing,” and then they have a completely different set of conversations with another buyer, and now you can’t compare them apples to apples. Identify them on their financial strength, how they’re funding the transaction, what the client experience will look like after close, whether they have a track record of closing these deals, and whether the deal fits your timeline and the role you want afterward.

Step 3 is the negotiation, and this is the most technical step, so let’s slow down a little. The key question is whether you’re selling the assets of the business or the equity in your entity. That single choice drives your optionality, your tax outcome, and your negotiating leverage all at once. In an asset sale, the buyer purchases your business, your client relationships, and select assets. This is the most common structure in advisory practice sales. In an equity or stock sale, the buyer purchases your ownership interest in the entity directly, so contracts and liabilities generally transfer with it. That structure can be great for client retention, but it’s less common, because buyers usually don’t want to inherit liabilities. Neither structure is universally better. It’s the tension between seller preferences and buyer preferences that gets negotiated in Step 3. Know what your preference is and how it may influence your negotiation, so you’re prepared and don’t have to accept whatever structure the buyer proposes first.

Beyond the five-step roadmap, a handful of deal points deserve their own attention, because these are the details that turn your deal from a headline into an actual success. If you’ve watched our webinars or listened to the SRG Exchange, you know I hate when headline multiples are used. It’s not that they aren’t important, it’s that they aren’t a true representation of the total economics of the deal, and those economics matter.

First, the purchase price and how it’s actually paid. Understanding the price you receive compared to how it’s paid is a concept that’s often missed, particularly in the headlines. Know the difference between cash at close, a note, an earnout, and the targets that must be achieved to receive those payments. Know how those payments might be treated differently for tax. A dollar of cash and a dollar of earnout are not worth the same to you, and they often carry very different risk.

Second, your role, transition period, and what you’re actually paid for during it. Plenty of sellers negotiate hard on price, and I get that, it’s what you’re getting for your business. But then they discover their post-closing compensation was never clearly discussed, defined, or contractually stated. Don’t assume everyone will remember the same thing after the ink dries. That gets a lot of people into precarious situations post-close.

Third, continuity. What happens to your employees, your location, your platforms, how you bill, and the amount you bill? These sound operational, but they directly affect whether your clients notice any disruption after the sale, and they can ultimately determine whether you receive your full purchase price. Fourth, risk allocation. Understand the key performance indicators that must be met, the timeline for them, and any restrictions like non-competes or other protections. Someone is holding the risk in these transactions, and if something goes wrong after close, you want to know in advance whether that someone is you. These four points often get negotiated alongside price, not after it. If your exit-planning team is only talking to you about the purchase price, you’re missing three-quarters of what actually determines whether the deal serves you well.

Step 4 is protecting your legacy, and I want to be direct about why it’s its own step instead of just part of execution. Legacy protection should be considered throughout the entire process, from selecting the right candidate to the final offer. You’re trying to protect what you’ve spent your life building. Make sure you’re confident not only in the exit partner you select, but in the approach they’ll take after you’re no longer involved. That means ensuring client communication and introductions are positive experiences, consistent with how you’ve historically communicated. Incorporate the buyer’s feedback, but don’t let them over-engineer the process. You know your clients best.

Next, don’t just announce the transition to your team, get genuine employee buy-in. Help your team understand what’s happening, why, and when, how you negotiated the terms with them in mind, and how the buyer benefits them in the short and long term. Your staff are integral to your continued legacy, and your clients will watch them for cues about whether this is a good transaction with a good buyer. Preserve the culture you’ve built, and be clear about your own transition period and role, because clients and staff both take their emotional lead from how you show up. And lastly, communicate how service will continue clearly and repeatedly, because uncertainty is what drives client attrition, not the change itself. Clients and staff don’t leave because of the deal, they leave because they don’t know what’s happening clearly enough or soon enough. This step is how you prevent that, and how you can run into your clients after the sale instead of sprinting the other way.

Once the deal is signed, Step 5 is execution, and here are the five markers every seller should track, not just hope for. First, agree on milestones, targets, and responsibilities in advance. Don’t write them down after the fact. Timelines and targets nobody agreed to in advance aren’t a marker, they’re a guess, and these markers set the entire transition tone. Buyer and seller should be on the same page about who does what, by when, and what success looks like. Without that discussed up front, buyer and seller often have very different opinions on commitment, status, and success.

Second, client communication. It sounds easy, but it’s an emotional part of the process and often the scariest for sellers. Work together so the message reflects all parties’ goals and the tone is client-centric. Decide what type of communication goes out, whether letter, email, or phone call, and in what order. Most importantly, communicate confidently and thoroughly, make sure the message is understood by all parties, and keep the tone clear, simple, and consistent to avoid client confusion.

Client consent and repapering is one people forget to track separately. Getting a signed agreement from a client is different from getting the client to actually stay, and it’s usually a condition of closing, so get it done and don’t just check it off. Maintain the relationship through the end. Smooth account and custodial transfers sound administrative, until they aren’t. A clunky transfer process is one of the fastest ways to lose a nervous client. Make it easy to follow, something a client can complete in one sitting, with accurate forms. Slow-moving paperwork is another sign something might be off, and it gets on clients’ nerves the fastest.

Client retention through and after the handoff, tracked by revenue or AUM, matters too. You can retain 95% of your clients and still lose real value if the two households that left happen to be your largest. On outreach order, the evidence is consistent: largest and most at-risk clients first, personally, fast, not last. Rehearse your message internally before you ever pick up the phone, and don’t practice on a real client, regardless of their size. Follow these five best practices to get the outcome you actually want. That’s the sale path, start to finish. Nicole will now pick up and walk you through what it looks like when the path is a merger instead.

Nicole Frey: Thank you, Kristen, I really appreciate you walking us through all of that. At this point we’ve heard a pretty thorough breakdown of what a sale looks like. It’s marked by a liquidity event, a defined timeline, and a clean transfer of ownership and control. So if your goal is to reduce risk, step back from daily operations, and have a clear end date, a sale can do that really well. But what if you’re not quite ready to hand over the keys? What if you want to keep working, and maybe even grow the business before you exit? What if you need more flexibility and would like to structure your transition over time? That’s where a merger comes in.

When we talk about a merger, as Kristen mentioned early on, we’re talking about two practices coming together to operate as one combined business. In a merger you’re not just transferring clients or revenue, you’re redefining ownership, roles, economics, and how decisions get made going forward. The goal usually isn’t just to exit, it’s to build something stronger and more scalable, and to provide for an owner’s exit with little to no disruption at some point in the future.

Now I’ll walk you through what a merger roadmap looks like, how the process works, and what you need to do to do it well. The merger roadmap is similar to the sales roadmap, but with a merger we’re bringing two parties together who will work as partners over a period of time. So some parts of the conversation are unique to a merger that you won’t typically see in a sale: What are our roles going forward? How do we make decisions? Do we need to incorporate compensation elements? And what does our transition out of the business look like?

As a general overview, we start with Step 1: what objectives are you trying to accomplish, and getting your business ready. For most teams those objectives center on growing faster, which is the more obvious one. Growing faster could mean expanding into different geographic regions with a partner in another city or state. A merger partner can let you expand your service model depending on what they do versus what you do. You can expand your client demographics or your contacts to centers of influence.

You can also accomplish a succession plan through a merger. It’s not the most obvious one, but for the sole proprietors in the audience, and I know we have a few of you, a merger lets you add a business partner who can be a succession partner down the road. It’s nice to know there’s a certain buyer, and that if something happened to you, you have someone to continue the legacy. Or if you just want to go on vacation and not look at your email for once, a merger can help with that too.

For a merger to be successful, you might also target improving your business outcomes. For those of you with a broker-dealer affiliation, an immediate outcome could be getting bumped up on the payout grid. For other firms, as you become larger you also gain negotiating power, so you might get better rates on benefits plans, or better terms from vendors, software providers, or a landlord. The more people, the less cost per person. Mergers can also reduce risk. I mentioned that continuity plan for death and disability: you’ll have a definite partner to buy your interest out, so you preserve both your legacy and the value you created for your loved ones.

And running more efficiently: sole proprietors sometimes face a decision. Do I build up my operations, which means shifting toward a managerial role and away from what I love, which is servicing clients and developing the business? Or do I roll up under a more mature firm that already has that infrastructure, so I can keep working with my clients while my merger partner covers the operational side? Those are some of the goals.

Once those are identified, you want to find the right merger partner: someone similar or complementary to your business who can help you accomplish the goals you identified, and who can help you improve certain components so you achieve that appreciation in value. I’ve listed a few items on this slide so you can run the list and identify what works for you. One note on growth goals, because in the context of a succession plan we have to be careful with them. Ideally, as parties merge, they share the same growth goals. Otherwise you’ll find yourself asking how to compensate when one person is more aggressive on growth and another wants to slow down. Is it more equity? How do we get more value to the person actively pursuing growth, or can we balance it through compensation? For someone who wants to exit, this discussion should happen. There’s nothing wrong with different growth goals, but you need to provide a balance so your partner is okay. We have a great team that helps advisors create compensation plans, not just for employees but for owners, so you can build that balance into your merged business.

On the next slide we see how to start creating that relationship with a potential merger partner. For those of you who aren’t ready to just sell and are still eager to grow, I recommend reaching out to your network. If you have a broker-dealer affiliation, that’s fairly easy: go to conferences, meet your peers, talk about your business and your objectives, and get to know them. Some of you already have those relationships because you see the same people year over year. If you don’t have that affiliation, or you don’t like conferences, reach out to a business coach or other industry contacts and start talking to peers. Those conversations are usually high level at first, just to build trust. Mergers specifically need to be built on a high level of trust.

Once you’ve created that trust, take a deeper dive and really understand what each party can contribute to a merged business. Understand how their business is built, its strengths and weaknesses, and any risks or opportunities. When you get to that point, I highly recommend setting up an NDA. It gives both parties peace of mind that the information is protected. You usually reach that point as you enter the due diligence phase, which is our next step. During due diligence you’ll exchange a lot of financial information, talk about your products and services and how you serve clients, share more about your employees and how you compensate them, your cost structures, your business strategies, and your goals.

As part of due diligence you should also obtain a formal valuation. There’s a lot we could share about valuations, we could fill another webinar on it, and I’m not here to replace a valuation expert, but I have some tips, because the valuation is typically the baseline for calculating your ownership division. As a simple example, some parties just go with the values they obtained: Party A is worth a million dollars, Party B is worth $500,000, so Party A is a two-thirds owner and Party B a one-third owner. For some, that’s the starting point. You might decide the valuation captured a lot of quantitative data but not all the qualitative aspects, so you want to negotiate a different split. Or maybe you already had a split in mind and the value didn’t quite line up. So you talk, you negotiate, and you end up somewhere in the middle, and that’s okay. A valuation isn’t always required, unless there’s a lending component involved or your CPA has tax concerns that a formal valuation can remedy. Technically you can also just agree on your ownership division. But the valuation is key in due diligence because it helps you understand the key performance indicators and assess the risks, opportunities, strengths, and weaknesses of your merging partner’s business. So I highly recommend getting one, and then you can go from there if you don’t agree with the resulting split.

Kristen Grau: Sorry.

Nicole Frey: To get a valuation that’s beneficial and useful, I recommend spending time cleaning up your data, especially for the sole proprietors here. You might have items on your P&L that are personal but treated as a business expense. There’s nothing wrong with that, but if you think through whether you want to transfer that into a partnership and have your partner pay pro rata for those expenses, you might feel you should clean it up a little. You may still want to pursue those deductions, but not within the partnership, and there are ways to do that. You also want to understand your balance sheet: what assets you have, how they’re treated, and any related liabilities, because all of that flows into the deal structure later.

The valuation approach also needs to be addressed carefully, because different approaches produce different outcomes, driven by what the parties want to exchange. A simple example: if two sole proprietors have a little operation, but the key is to merge their books of business together, create a partnership, stop tracking mine versus yours, and grow it together while eliminating capacity issues, then asset value is just fine. Talk to your valuation expert, but the asset value is what you’re pursuing there, because you really just want to know what the asset you’re contributing is worth. For more complex or mature firms with a robust balance sheet, you might have acquisitions on there, notes receivable, notes payable, liabilities from those acquisitions, and outstanding debt, plus a more robust operational infrastructure. All of that should be looked at by a valuation expert, because as you merge someone else in, they’ll carry those costs and debt payments pro rata through cash flow. If they take on some of those responsibilities, they want that reflected in the valuation, so equity value would be key there. You don’t have to use the same valuation approach for both parties. What I like to see is the same valuation date, but the actual approach depends on what each party is contributing.

That brings us to deal terms, which are also a result of what you want to contribute. Just like with the valuation, it’s important to understand what each party brings. It could just be the assets, which is fairly simple. But many of you may have engaged in acquisitions with loan payments still outstanding. So the question is, do you keep those liabilities on your personal ledger, or do you merge them in as well? If you merge them in, there’s usually an adjustment to the value, because your merger partner helps carry and pay down that liability. Some people say that because of that, they’d rather not have it influence their ownership percentage, so they just contribute the asset.

I also want to point out what you can receive in exchange. For parties treating this as a long-term strategy, you might just receive equity in return. Since we’re looking at mergers in the context of a potential succession plan, with you transitioning out of the business, you might ask for a portion of the value in cash. The cash component is treated as a sale, so you’ll pay taxes on it. The equity portion can be tax-deferred if it’s handled carefully. If the cash component is significant and the equity component is minor, the IRS might argue this is a disguised sale, that you actually sold your business and should pay taxes on the full value received. But if we structure it carefully, and you mainly receive equity with a smaller portion in cash, the equity portion can be structured to be tax-deferred.

The critical points as you structure the deal are listed here. Number one is cash flow. Sometimes these mergers look great theoretically, but when you plug each party’s numbers into a spreadsheet, you find one owner ends up with less cash flow than before the merger. That’s why we do this analysis. When two parties have different profit margins, and one operates leaner, that party picks up some of the other’s expenses, because profits are usually allocated based on ownership. There are remedies for that, so it’s not the end of your negotiations. For some, it’s easily solved with a bump in the grid rate. For others, it requires more manual adjustments, like combing through the P&Ls and reducing redundancies so the profit margin looks better. And if that doesn’t work, you can consider compensation, at least for the short term, to balance out the partner who saw a reduction in take-home.

Owner roles and commitments are also crucial to discuss. Some teams say they’d like to postpone that until after the merger, that there’s too much going on with operations, legal, and ownership division, and they’ll talk about what they actually do later. I don’t recommend that. A merger is basically a marriage at the business level. The merger date is your wedding date, and then you enter the honeymoon period not knowing who’s doing what. If you then realize you’re on different pages, it sours the relationship right away. So talk about it: What’s your vision? What would you like to do after the merger, and is that compatible with your partner’s expectations?

Ownership classes, management, and voting requirements matter too. We got a great question from the audience: what if I want to merge but don’t necessarily want to participate in management voting? You can address that through ownership classes. If you receive an offer from a consolidator to merge your business in exchange for equity, I highly recommend reading the fine print and understanding the rights and responsibilities attached to that equity, because sometimes they’re very limited. We always work with parties through that so the business can still run efficiently, so not all owners need to agree all the time, but when a critical decision could severely impact an owner, you need greater buy-in, and we set different voting requirements for that.

Risk protection and exit options are also key. These mergers usually involve formal entities, which means governance documents, and those documents should spell out how you can exit if the partnership doesn’t work out, or, if it does and this becomes your succession plan, how you reduce your ownership, how the value is determined, the payment terms, and the conditions attached.

In Step 5, which follows the merger close date, your real work begins and mine typically ends, because this is the implementation side. Mergers succeed when the parties spend time and effort on integration. Look at that P&L and reduce operational redundancies. The easy one: if you have two CRM systems, pick the one you like most and transition to it. The hardest part is if you have to let some people go. Ideally, for firms with a larger organizational structure and multiple departments, you can reallocate staff, but sometimes you’ll have to let people go. Roles, compensation, and benefits should be determined as you bring staff in. What will they do? Which comp plan do we like, or do we start over and use it as an opportunity to create something great for the merged business and our people? Spend time on that.

Branding and marketing doesn’t always come up in mergers, especially as sole proprietors join a larger firm that already has branding figured out, which might be one reason you’d roll up under them. And the client service model, which Kristen also pointed out on the sales side, has to be handled delicately. Make sure your clients understand this is value-added: more resources, more capacity, maybe different services and products. Position the merger just right. If changes to your client service model are needed, do it gradually, because people are generally opposed to change, but eventually you want one client service model that’s efficient and helps you run the business well. Monitor your success, and I recommend doing that monthly for the first year after your merger close. After things settle, you might go to quarterly reviews. Reviewing your metrics is good business practice generally, but with mergers it’s even more important, so you might even do it weekly for the first few months to catch anything that needs attention right away.

For those of you still on the fence, you’ve now heard what a sale looks like and what a merger looks like. A sale is immediate, unless you do the sell-and-stay scenario where you stick around a bit longer, but you’ve sold your business. Mergers are more of a long-term solution, but they offer opportunities. We have a nice slide, available if you request the deck, that outlines the pros and cons of a sale versus a merger. There are pros and cons to both, and as we said throughout, it starts with your objectives, goals, and preferences, and based on those, one will be the better fit.

In short: if you want a clear liquidity event, to take all your chips off the table, reduce your ownership, and no longer carry risk, a sale is the right way. Not all of you have an internal person who can pick up your practice. Maybe you thought you had an internal successor, but the business grew too much for them to handle, and you don’t have a particular buyer in mind. Kristen’s team does a fabulous job sourcing buyers and helping you find a candidate who fulfills most, or even all, of your wish list. I don’t want to make promises, but I know that team works hard to make it a great transaction for you. You could even negotiate a sell-and-stay scenario, where you sell your practice but don’t want to retire, so you stick around in an employment or contractor capacity, figure out your role, and get compensated for it. For anyone who wants to do something great over the next few years and then continue their legacy through a partner, a merger is the right way. It needs to be structured carefully and done with someone you trust, but my team can help you through all those difficult conversations and make sure you’re covered.

So this is where we can help. These transactions are complex, with different components to consider, and you want to cross all the T’s and dot all the I’s. We can help up front to get you ready. Our valuation service helps you understand your business and whether there are items you can tackle to improve value. On the entity planning side, we help make sure the entity is ready, which is crucial for mergers, maybe less so for a sale. The entity can make a merger very painful or very easy, and if it’s structured right, you shouldn’t have much trouble. On the transaction support side, if you want to sell and don’t have a buyer in mind, we have our Seller Advocacy program, that’s Kristen’s team, and if you already have a buyer, we have a team that helps make sure all deal components are thought out well. On the merger side, my team can help you cover all those questions and aspects. On the implementation side, after a sale or merger, once the dust has settled and the numbers are stable, I recommend a valuation, usually about a year later depending on how long the transition takes, so you can evaluate whether to make tweaks or address issues. And if you’re concerned about compensation after you merge in somewhere, we have a great team that helps with owner or employee compensation plans.

With that, if you have questions, feel free to reach out to our business development team. They’re very knowledgeable and can answer many questions, especially about how we can help, so don’t hesitate. I think we covered most of the submitted questions, so let me take a look. There’s one more open question: “What types of buyers are you currently seeing in the market? I hear PE firms are very active. Are they dominating transactions? If one is not interested in a sale to PE, what does the buyer landscape look like?” Kristen, do you want to take that, since it’s more on the sales side?

Kristen Grau: Yeah. PE firms are active, but so are other independent firms, RIAs and other broker-dealer-affiliated firms. The PE firms are just the big headline firms, the well-known names, so you hear about them more often. But the right buyer really depends on the objectives of the seller. Whether someone is interested in selling to a PE firm depends on what they’re trying to solve for. If you want a headline multiple, you may want to explore options with a PE firm. If you want to mitigate risk, not stay on as long, and have a defined timeline, other buyers may be more suitable. So it really depends. I wouldn’t say they’re dominating transactions, they’re just more headline transactions. And if you did want to explore options outside PE firms, that’s doable in a lot of ways, particularly through our Seller Advocacy program. We first look at your goals, what you’re trying to accomplish, and whether you want PE firms in the mix or not, and then we go out and actively explore options that meet those goals.

Nicole Frey: Perfect. There was also a question on the buyer side, whether we can assist with any of that. The tip here is to subscribe to our buyer profile so you have access to new listings. We also recommend teeing your business up for acquisition: have all the elements in place, like a formal entity, get a valuation done, and understand the strengths and weaknesses of your business. That way, if lending is involved, you understand the cash flow implications you can manage as part of the deal. So make sure you’ve done everything on your end to run a proper business and shine when you’re talking to sellers.

Kristen Grau: Yeah, the other item on the buyer side is AcquireEdge, which is led by Parker, where we’re on the buy side representing you, helping you formulate a competitive offer based on due diligence and cash flow analysis. So we can assist, actively or passively, based on your needs and where you’re at in the process.

Nicole Frey: Perfect, and a link was just posted in the chat for that service. Maybe one last question before we wrap up: “Does the size of my practice dictate which buyers would be interested in purchasing my practice?”

Kristen Grau: Yeah. The size of a practice varies. If you’re a seller with $500 million in assets under management, a firm with $100 million likely can’t buy you, or vice versa. So size matters, both in buying and selling. It also tends to dictate the size of your team. If you’re a selling firm with a team of, say, 6 or 20, you’ll probably want a similar-size or bigger firm buying you so your team can grow with the buying practice. So size definitely matters, no pun intended.

Nicole Frey: Thank you so much, everyone. I hope we got all your questions answered. If you have more, don’t hesitate to reach out, and tune in, because we have more webinars coming up shortly.