David Grau Jr.: Alright, good afternoon, everyone. Give everyone just a second here. I can never tell if Zoom automatically admits all of you, or if I can actually watch the counter tick up as it admits you one or two at a time. So we’ll give it a second so you don’t miss anything and you’re in the right place.

We are focused today on preparing your business to be sold, generically, in the next three to five years. That’s the subject you saw in the invitation email and on the website: build it like you’ll sell it. Because at the end of the day, you’re going to sell your business. You’re going to leave the industry at some point, horizontally or vertically. You and I both know it’s coming. So let’s make sure we can control that process, with a goal of, say, three to five years. If you have a year or two, or you’re getting ready to list with us and want to be done in the next six months, I suspect you’ll still get a couple of good takeaways. They may not all be as broadly applicable, but you’ll still come away with ideas on how to improve the value of your business, or not just the value, but your overall outcome, so you make informed decisions and feel comfortable. Because you’re only going to do this once if you do it right.

Our agenda today is to make sure you’re more prepared whenever you decide to sell. Hopefully we get the opportunity and would be honored to guide that process. But whether you do it yourself, five years out, ten years out, or five months out, we want to make sure you have good information, resources, and strategies, so it’s as enjoyable and stress-free as possible.

A little housekeeping. Since you’re all registered, I hope you know who Succession Resource Group is. If you don’t and you registered anyway, thanks for taking a flyer on this. Here’s the 30-second version. We’re a consulting and coaching organization, you can pick the label, because we do both. Whether you’re buying, selling, building a more valuable enterprise, or equity sharing with key team members, if it impacts the value of your business, sharing it, growing it, merging it, that’s what we do. You’ll see our core services on the right, everything from valuation to sell-side representation when you’re ready to retire, and everything in between. There’s a lot of room between those goalposts, I acknowledge.

We’ve been doing this a while. I’ve been at it since the early 2000s and started Succession Resource Group in 2012. We should probably update this slide, I think we’re at 25 or 26 full-time employees now. The point is, we have a decent-sized team of really smart people. This is not a bunch of admins and attorneys, these are consultants and experts. And you’ll see the alphabet soup of credentials down here. The work we do, valuing, buying, selling, and building more valuable businesses, requires a handful of disciplines. It’s great to have a coach or consultant who knows the industry, and there aren’t many of those, and they mostly all work here, which is why our average consultant tenure is 12, pushing 13 years.

But after the consulting and coaching, you have to do the contracts. Once the contracts are prepared, they go to the CPA for tax strategy. Here’s what happens otherwise: you come up with a great strategy with your coach, take it to your attorney to write up, and it’s the first time they’ve written that strategy, so it’s close but not perfect. They ship it to the CPA, who gives feedback to optimize the taxes. It goes back to the attorney, who tweaks it. Then back to the original coach, who says, this isn’t quite what I designed. The rigmarole goes back and forth, and eventually you get some semblance of the original goal, but you’ve spent tens of thousands of dollars to create the 1.0 version. The benefit with us is we control that process end to end. Incidentally, it ends up cheaper in most cases, mostly because we know the strategies. We’ve done this a hundred times, so we give you those documents as a baseline and refine from there. That’s us in a nutshell. All we do is work with independent advisors like you.

A few more housekeeping items. Let me hit the agenda so you know what’s coming. Number one, what your practice is worth today: different valuation lenses based on the size of your firm. That sets the table. Number two builds on it: how do you maximize your value, the drivers buyers actually pay for. Tangible levers you can pull, relevant to your size firm, not things you can’t change, like the age of your clients. And then some red flags that could cost you, which buyers won’t always tell you about, because what costs you is good for them. Then we land the plane with the big one: how do you get your value out of the business? If we start too late or don’t have a good monetization strategy, we could have built an amazingly valuable business and still end up selling at a discount, just because we didn’t have enough time. Fourth, I want to make sure you know how we can help.

What I’m sharing today, the strategies and the data on the next couple of slides, is either wisdom of the crowd or pulled directly from actual transaction data. On occasion I’ll weave in my opinion, but I’ll flag it. Then we’ll get to your questions. Feel free to use the Q&A panel; we have a moderator watching it, and I’ll save time at the end. There’s a quick poll popping up right now, it helps us bring you better content on future webinars and after this session. The slides are available on request, we don’t blast them out, but Sabrina and Craig from our team will follow up. And this session is being recorded, like everything in our lives now. It’ll go out automatically, I believe, about 24 hours from now.

So, why is this conversation happening now? Historically, you could sell your business without much preparation and still get a pretty good value. Could you get more if you prepared? Yes, even historically. But the gap between preparing and not preparing wasn’t as pronounced as you’d expect. Good practices got a premium, and okay practices, what I affectionately call a fixer-upper, where you built the business for a great lifestyle and a good job rather than to be sold, still got a pretty good value, just because of demand. That will not be the case in the next four to five years and beyond. We’re already starting to see it change.

The first stat is about 106,000, the number of advisors planning to retire in the next decade, based on the recent Cerulli study. Most of them don’t have a succession plan. The footnote says 26% have no plan at all, and that’s just those who specifically indicated it. The next biggest group, 40 or 50%, are “in the process of creating a plan.” That’s still not a plan. Thinking about it is not an actual plan. So a lot of advisors are going to retire in the next decade with no exit strategy, and too many will wait too long.

There are already record M&A transactions. I put some stats here for context. DeVoe, Echelon, and Fidelity each put out studies, but those only capture what’s publicly visible: successor ADV filings, press releases, the news. They’re not deals those firms worked on, and they’re largely reporting on the same transactions. What’s interesting is our own deal data: 171 transactions we facilitated just last year, most without a press release because they were smaller deals of varying shapes and sizes. So there’s far more transaction activity than any of us realizes.

Now, the last bubble: 80% of deals reported last year involved private equity-backed buyers. If you’re a buyer listening, first, you’re in the wrong webinar, but you might think you don’t stand a chance. Here’s the up and down side of statistics. Measured by AUM, yes, it’s 80%. Measured by number of transactions, it’s a small fraction of the market. Private equity and PE-backed buyers aren’t generally trying to buy most advisor businesses. They want large enterprises that are no longer owner-operated. They are moving downstream, but as they do, their offers and structures aren’t even competitive at the smaller sizes. At the larger sizes, where you have fewer options, they strike a chord. But most of you listening either have no interest in selling to private equity, which is the quintessential selling out, or will never get big enough, or want to be, to court serious offers. Will they make offers? Yes. Are they good offers below a couple billion in AUM? Not really. You can do better.

That’s why this matters now. It’s been relatively easy historically to get a good value. I don’t think that will hold, and in another five to ten years some practices, because they weren’t prepared, will have a tough time selling at all. I don’t want that to be any of you.

Four variables to start with. These give you a good indicator of where you’ll end up on the exit path, so bookmark this mentally, I’ll come back to it. First, practice size, which determines who would even bid. It’s not good or bad, but if you have $50 million in AUM, you’re not big enough to have internal successors or to court private equity, so you’ll probably sell to a peer. Second, timeline. Say you’re at $500 million and want to be retired in two to three years. That probably crosses off internal succession, it’s not enough time. But if you have seven to ten years, the sky’s the limit. Third, buyer universe: who would realistically compete for your practice, which ties back to size and timeline. Fourth, your priorities: flexibility, control, timing, risk, or cash and upside. The answers really influence which exit paths you can and should follow.

On multiples. If value’s on your list, and I hope it is, there are a couple of lenses. For a book of business, say under $200 million AUM, those are priced mostly on recurring revenue. I put the average here, 3.27 on your last twelve months of recurring revenue, which gives you a ballpark, probably sub-$2 million, certainly sub-$1 million. At this size, buyers aren’t really buying your business, the lease, the people, they’re buying the clients and the assets and dropping them into their own infrastructure. So they don’t care about your overhead or EBITDA. But as we get bigger, into the $500, $600, $700 million range, the type of multiple shifts from revenue to earnings, because now you’re buying the machine that produces the revenue, and that machine has a cost structure. The earnings range is 6 to 14 times, pretty safe, averaging 9.98, call it 10.

Multiples vary by firm size, and so do the terms. A prototypical 100 to 200 million AUM listing gets mostly cash at closing, or within the first year, maybe a contingency that’s never needed. Get into the larger sizes and no one pays all cash; you’re lucky to hit 60%. On revenue multiples, the range runs a little below 2 up to 4 or 4.5, but there’s not much selling below 2 anymore. Most is between 2 and 4. Look at how many deals happen above 3.5 times top-line revenue for a book of business, that’s a lot of money. How can someone pay three and a half times? For a typical million-dollar fee-only RIA, a buyer can get bank financing over 10, 12, even 15 years, and at today’s rates, after expenses, taxes, and debt service, these deals are still cash-flow positive every year even fully leveraged. Put a little cash down, add some growth, and 4 to 4.5 times can work. Be careful, you can overpay, but you can also get good deals. The average is 3.27, but it’s an average across a very broad range.

Let me compare the two lenses side by side. Take a typical $2 million practice: $2 million in revenue, 40% overhead, 30% owner compensation, leaving a 30% profit margin. As a revenue multiple that’s about $6 million, and as an earnings multiple it’s also about $6 million. The averages don’t produce a dramatically different number under normal circumstances. But I can’t magically make more revenue appear, whereas I can strategically decrease overhead, say from $800,000 to $700,000, which raises my EBITDA. Now the top-line multiple still says $6 million, but by cutting cost strategically, and I don’t mean fire your marketing person or advisor team, I boost earnings, and times 10, anything gets big fast. I just added a million dollars in value. So the answer usually isn’t dramatically different, but as you get bigger, how you spend your money is one more lever you have.

Now, how do we build value, especially if your window is three to five years? And why is three to five years not much time? Our succession team will tell you it isn’t, because most internal succession plans span seven, sometimes ten years. Here’s why it’s shorter than it feels. First, it takes three-plus years to make intentional changes to your financials and see them show up, because a buyer will wonder what changed between last year and the years before, when profits were lower. If it looks like you positioned the business for sale, they’ll trust the older numbers instead. Second, multiples are earned, not given. Premium valuations go to firms that are prepared: growth, good client demographics, strong recurring revenue, documented processes, low key-person risk. Changing those things takes time, and you can’t change too much too fast. Third, liabilities outlive the timeline. You’d be surprised how many deals we work where someone signed a new five-year lease and then listed. From a buyer’s view, me wanting to take over your office is one thing; me having to take over an office I don’t need is another, and it comes out of your pocket. Leases, promissory notes, forgivable loans, broker-dealer commitments, all need to be managed or retired before you sell.

Fourth, buyers pay more for a business than a book. What buyers want is continuity, smooth transfer, low risk. That can come from you personally introducing 50 relationships, or from you having 1,200 households and a great team where the client sees little change. Either way, it takes time to put in place. Fifth and sixth, entity and tax planning take time. It’s common that we start internal succession with an advisor who has an S-corp, or an LLC taxed as an S-corp, and for internal succession an S-corp is about the fastest way to undermine your value. We need to make strategic changes to help the buyer write it off, which helps them pay you more. And personal tax planning: we have a great listing right now, a great advisor in Pennsylvania, and if we could go back in time a year or two, he’d have moved to Florida before listing. Those things take planning. And last, the transaction itself takes time. Working with us doesn’t take a year, but listing, gathering data, going to market, negotiating, due diligence, contracts, and financing can legitimately take four to six months, and then transition is another 6 to 18. So depending on your three-to-five-year window, you can run out of runway fast. Can you do it in six months? Sure, with compromises. My job today is to give you all the options, and for that you really want that three-to-five-year window. Longer is better; shorter we can make work, but with less optionality.

Let’s talk about who your potential buyers are. Practices under $2 million, businesses in the $2 to $10 million revenue range, and enterprises from $10 million to a billion-plus in AUM. The buyer list grows as you get bigger. Under $2 million, internal successors are harder, because you don’t have much headcount, maybe two or three good successors, and if one leaves you’ve lost 30 to 50% of your pool. It’s doable, but you probably need to be in the $1 to $2 million range for the internal conversation to be viable. You definitely have peers and third parties, and that gets you a great value. In the $2 to $10 million range, internal succession is much more viable, and as you approach $7 to $10 million you start getting good offers from PE-backed aggregators. Some of you have received PE-backed offers, and yes, I’m talking about good offers. They’ll make offers at any size, but under $2 million their offers, frankly, you should not accept, shop them and you’ll see. At the enterprise level the sky’s the limit, though internal succession gets harder because the firm is big and expensive, so you had to commit early, hiring, staffing, training, and mentoring intentionally. We’ve seen it work, and we’ve seen owners outgrow their team’s ability or desire to buy the whole thing, which is when it becomes internal succession plus a PE-backed aggregator, or direct PE.

The takeaway is understanding the universe of buyers you should consider, and why you care, because the deals are very different. Pure third-party sales, selling to someone just like you but 10 or 20 years younger, are surprisingly simple and attractive when you’re prepared: banks, broker-dealers, and some third-party asset managers provide financing, and at today’s multiples buyers can borrow nearly all they need and pay you at closing or within the first year. Internal successors are trickier: it’s the lowest valuation, or takes the longest to get paid, over multiple tranches across years. Then the PE and aggregator deals are totally different. The multiples are higher, but so is the way they pay you: roughly 40% cash down, 30% on an earnout with 10-20% growth targets for four to five years, and 30% in aggregator stock that’s more aggressively valued than the multiple they quoted. And the challenge is they pay higher multiples on much smaller earnings, because they buy businesses, not books. In effect, they pay you back with your own money: if you get 40% down and another 30% only if you hit 10-20% growth for four to five years, they’re basically having you stay, keep working, and grow the thing to create the money to pay you. If you’d stayed, grown it, and sold to a peer, you’d have gotten more. There are spots where PE makes sense and spots where it doesn’t. Give yourself three to five years and you can make a fully informed decision.

Now, fundamental value drivers that apply to everyone, big or small. Recurring revenue, obviously; 3.27 on recurring is a good multiple. Growth, and I mean sustainable growth, not just asking for referrals, that’s table stakes. Do you run a podcast, a repeatable seminar series, Google Ads, social media, centers of influence? Profitability, we’ve covered. Age of clients: you can’t make clients younger, but if you build a multi-generational team, over three to five years your book, on average, does get younger, and you get a shot at engaging older clients’ children and grandchildren, and their accounts. And track revenue per client, because what’s measured improves.

Put those into action over a three-to-five-year window. Lift recurring revenue from 90% to 95% and you add value. Raise your organic growth rate to 15%, and I mean organic, not market appreciation, because buyers back that out immediately. We have practices on our site that grew 5 or 6% a year over five years, but factor out market appreciation and they’ve actually been shrinking; the net flows are negative. So focus on growth. Multi-generational clients, in action, make an impact, we’re not doubling value but we’re moving the needle. Revenue per client: bring on higher-net-worth clients to lift the average from $4,500 to $6,500, or do the opposite, a partial book sale of your C and D clients. Revenue drops 5 to 10%, but your other KPIs go up, and you free up time to increase client touches for the clients that matter, and to rebrand. Grau and Associates is a great name, probably taken, but when I retire, the continuity I built goes out the window if the buyer changes the name. Go with a more general identity, like Succession Resource Group, the same holds for you if you’re Evergreen Financial Advisors. But these take time. Increase profitability a little, times 10, it helps. And make sure client-facing staff have good protections in place. If you’re in California, New York, Washington, or soon Oregon, you can’t do non-competes, and you don’t have to; there are other strategies, like garden leave, to protect the practice. For internal succession it’s less of an issue, but for an external buyer I want to show them: I have great client-facing talent, they do most of the work, they’re paid fairly, and if they leave we have protections. That helps a lot. Did we go from $3.5 million to $7 or $10 million? No. But we made a material improvement, and we’ll attract better buyers because of the work you put in.

A few more value drivers that work for any buyer. A portable business, built around your team, not a platform. We deal with this constantly: a great practice that should be easy to sell, but the broker-dealer requires a general agent to approve the sale, which shrinks the buyer network and undermines value. Or you’re with a small RIA back office you love that has no one else in your area. With three to five years, I’m not saying move to Los Angeles, but you can make strategic decisions about how you’re affiliated, because you could build an amazing business and then get 70 cents on the dollar because it isn’t portable, and that stinks. Real, documented growth from repeatable sources, not founder-dependent referrals. A Gen 2 and Gen 3 bench of talent, which is why aggregators pay so much for larger businesses: with headcount, it’s no longer an owner-operator shop, you can take the founder out and the client experience is still delivered by the team. Documented processes, reduced founder dependency, and clean financials. On that last one, get your P&L from your bookkeeper once a quarter. No bookkeeper? Get one, then have them send you the P&L quarterly and just stare at it. Know the categories, clean up the owner-discretionary items. We have three to five years, let’s make this the shining gem it probably is.

Red flags buyers won’t tell you about. Client concentration: you see a $10 million household as a feature, the buyer hears risk, because if they lose two or three of the top ten, the deal doesn’t cash flow, so they bake it in. Get an outside perspective, through our annual valuations or a coach, to spot it. Founder dependency, the inverse of what we just covered: if I put the cone of silence over you for six months with no notice, what does the business look like after? For most, it’s a self-employed business, an amazing job, low stress, very profitable, but take the owner out and there’s no business left. That’s fine, but it’s unsettling to a buyer, and the bigger buyers now want truly turnkey businesses that don’t need the owner. Commingled financials, get the personal expenses off the books. An aging client base, track it and keep it younger where you can. Long-term obligations: a buyer might take your office temporarily, but if you signed a new seven-year lease, they’ll back that cost out of the EBITDA we’re multiplying by 10. And unsigned agreements: if you have key client-facing team members, get something written down, confidentiality, garden leave, the things that belong in an employment contract. That one’s your easiest fix in three to five years, and we can help.

Now, getting your value out. If we make these tweaks over time and build a business worth $1 million, $5 million, or $50 million, how do you actually monetize all of it? It depends on planning. Start with who, when, and how. The who ties back to size, buyer universe, and priorities: if you want the most value and least risk, you’re not doing internal succession, but if your who is internal, we make concessions elsewhere to support it. For when, separate two questions: when do you slow down, and when do you retire? They’re often different, and if you want to slow down next year but not retire, there are strategies to have your cake and eat it too, but we need to know. And how: do you post on LinkedIn, work with a sell-side firm like ours, or work your own network?

Priorities really come down to price, terms, and fit. I’d hope it’s fit first, then price or terms depending on your risk tolerance. The market does seem to be shifting toward price first, terms second, fit third. The good news is fit’s still in the top three, and if you put fit first, everything else gets easier.

Your options are internal, external, or merger. Unless your plan is to die at your desk, which still leads to option one or two after we drag you out, everyone here will sell to their team, sell to an outside organization, or possibly merge if there’s enough time. I’ll leave merger on the slide because it’s my slide, but doing a merger for retirement purposes is like telling your clients to plan for retirement by buying a lottery ticket. It’s risky. It can be a good growth strategy when you have enough time to recover if it doesn’t work, and about half don’t. But if you’re selling in three to five years and the merger fails, your timeline just got longer, best case. So focus on internal versus external.

External options. Buyouts are easy: when you’re ready, we find buyers or you have one, we structure the deal, you transition over 12 to 18 months, then retire. It’s a lot of change fast, but it works, and retention is typically 95 to 97% when you do these right and focus on fit; anything south of 90 is the outlier. Partial book sales are like a buyout, but instead of retiring in 12 to 18 months you sell the C and D clients and transition them. Who really owns your C and D clients? There are good 35-year-old advisors with a $30 million book who are great at caring for clients but not great hunters; they’d love to buy your C and D clients, which is a win for those clients too, because they get better service. It takes longer, and you can do it over three to five years. I’ve seen advisors sell the C and D clients, then the B clients, and we practically pry the A clients from their cold, dead hands, because they’re down to their top 20 or 30 households asking, retired from what? Sell-and-stay, or merger acquisition, is descriptive: you sell, then stay, working part-time for three, four, sometimes five years instead of transitioning in 12 to 18 months. It takes longer but can get a better value; you need size, but with a million or two in revenue and you staying part-time, you won’t lose clients, the business usually grows, and the buyer does that math in their offer.

Internal options. Leveraged buy-ins: you sell in larger increments, say 20 to 25%, your team gets a bank loan they repay over 10 to 15 years, and you get cash for that stake. A couple of years later you sell another 24 to 25%. You keep control while having multiple large liquidity events, and they earn their stake and pay for it. Banks love it, successors like it. Compare that to profit recycling, gradual 1% seller-financed sales, which is less common now because financing is available. The benefit of the leveraged buy-in is that when your team finally buys the last 51% in year five, financing is easy because they have payment history, they’re already owners. If you wait and sell 100% at once as you retire, the bank sees risk in lending millions to former employees and it won’t resonate. So even internally, three to five years gives you real options, and options translate to value and less stress.

Getting the deal done. I won’t say we’re agnostic, we’d love to list your practice, but if you already have a buyer, we can facilitate that; that’s our deal support. If it’s internal, that’s our succession blueprint service. If you want us to find a good buyer, or you have one or two but want a broader market and someone negotiating on your behalf for the best value, fit, and terms, that’s our confidential listing service. Regardless, we handle the financing, contracts, tax strategy, and valuation, end to end.

Now, exit options versus value. You’ve got the internal sale, the peer sale, and the PE aggregator. Anyone who tells you internal succession gets you the highest value is probably from Colorado, and you don’t want whatever they’re smoking. Internal succession will never get you the highest value, but it can get you a good one: 7 to 10 times earnings, documented regularly. PE aggregator deals run 9 to 15. Yes, 15 is higher than 7 to 10, but 9 or 10 is in the same range. So you can get a fair, even good, value with very little risk on an internal deal, if you have time and planning. The peer-to-peer sale is right down the middle, minimal risk because you’re mostly paid within the first year, selling to someone like you who just wants more of what they already do. Your highest-risk deal, like everything in life, offers the highest potential value. Can you get an amazing value from an aggregator or PE-backed deal? Absolutely. But the jury’s out for four to five years on whether the equity you were paid with is liquid and whether you hit the growth hurdles. If it doesn’t work, it’s the worst deal of your life; if it all lines up, it’s the best. We’re not for or against these; we get paid a percentage of your value, so I’m all for 15 times earnings, as long as you’re comfortable with the risk to get there.

Last thing, what today’s sellers wish they’d done earlier. Five of them. One, start tracking and managing your value annually. I know, you’re asking a barber if you need a haircut, we have an annual valuation program. But specifically for preparing to sell, you’ll get enormous value from the valuation debrief and the check-ins throughout the year, more than from anything else. Two, get your business due-diligence ready. Talk to your CPA, a firm like ours, or your coach, and get an objective outside look at your weaknesses. Know your revenue sources, client headcount, and KPIs a buyer will ask for. Three, make sure you’re unencumbered and in the right place, the affiliation issue: if your GA has to sign off, or you can’t move your book to another territory, that can decimate your value fast, and with three to five years you have time to change it. Four, create competition, don’t take your first offer. Our deal-support work, where a buyer and seller met offline and are already doing a deal, consistently comes in around 80 cents on the dollar of what they could have gotten, and often they could have had a better buyer too, they sold to the person they knew and trusted rather than the most qualified or highest bidder. Five, don’t wait too long. If you want to retire by the end of 2026, drop licenses, drop registration, and go, it would be nice to have started talking in 2025. I want you to enjoy the process, not be stressed. If we have only 6 to 12 months and you’re out of pocket for a month or two, you make our job of getting you the most value and the best successors really hard. We aren’t miracle workers, so start before you think you need to.

If you want more from us, we have another webinar coming up, I’ll mostly be moderating with Ryan, our valuation expert, since it’s all about valuation. And there’s our newsletter if you find the content interesting, we produce a lot of it. This is probably the only other commercial you’ll get. We can help with valuation, deal support if you’ve found a buyer, internal succession planning, and seller advocacy, or Advocacy Lite if you already have a pool of candidates. Bottom line, we can help, and we look forward to the opportunity when the timing is right. Let’s get to your questions.

First, from Matt: on your EBITDA and revenue chart, where are you getting your averages? Great question. It comes from our transaction data, the 171 transactions, plus a handful of lenders, PPC Loan, Oak Street, Skyview, who share their data. That gives us a bigger and less biased data set, hundreds of transactions. If you don’t know the source of the data, you can’t trust it.

Next, anonymous: 3.27 is low for a pure advisory practice around $200 million. You’re anonymous, so it’s hard to disagree, but I will. 3.27 isn’t my opinion, it’s simply what buyers are paying for practices sub-$200 million. Around that $200 million mark things shift. There are practices that get 3.5 or 4 times because they’ve genuinely built a business. But it’s hard to call the average low, I’m just reporting what’s happening. Can you get more? Sure, either because it’s a better-than-average business or because you were more flexible on terms. There are lots of ways to skin that cat.

Do we ever see exit penalties if either side doesn’t complete or honor the deal? Not as explicitly as you might be describing, but our contracts are very specific on pre-closing covenants and conditions, the reps and warranties, and on what you’re supposed to do post-sale, and there are often retention clauses or clawbacks. So conceptually, yes, for both buyer and seller, if they don’t do what they said. But that depends on it being written down, and on working with an attorney who knows both the industry and M&A, and there aren’t many of those who don’t work here.

How could AI innovation impact staffing, maybe fewer principal advisors? Good question. We’re starting to see AI have a material impact. Adopting AI won’t by itself improve your value, mathematically you spend money, which lowers earnings and value. But it’s how it manifests: if you deliver a better client experience with less client headcount, or get more done operationally with less headcount, that helps profitability, you spend a little and save a lot. I don’t think AI replaces advisors, but the bionic advisor, you plus AI, can do amazing things.

Do you ever add a penalty if, in three or four years, one side backs out? Yes. Not written that explicitly, but there are consequences. Three to four years in, the clients have usually landed with the buyer and the seller’s on a beach with a Mai Tai, but if it’s drafted properly there are consequences. Even with seller financing, if the buyer stopped paying, you’d have protections in your documents.

You mentioned S-corps being problematic, can you elaborate? I can, but it would take a whole webinar. If you’re an S-corp, or an LLC taxed as an S-corp, and selling to a peer or aggregator, it’s not a big deal. If you’re doing internal succession, then yes, follow up, you do not want to be an S-corp doing internal succession. There’s a better mousetrap.

Last one: do you advise on growth strategies and preparation for a sale? Yes, though not as strategically as a dedicated coach. But on our valuation debrief calls, Ryan, head of our valuation department, gives very specific recommendations to improve value and shares how firms like yours are growing. You still have to operationalize them, but that’s the benefit of an annual debrief: we bookend each year by asking whether the changes you made are having the right impact. If revenue grew 6% but your value grew 12%, you’re doing the right stuff. If revenue grew 12% and value grew 6%, Houston, we have a problem, and that’s what surfaces on those calls.

With that, you’ve seen the contact information. Sessions coming up in October and November, we hope you can make those. Thank you all, appreciate the time, be well, and we’ll talk soon.