Selling Your Advisory Practice: What Your Clients Need from You

You’ve decided to put your exit strategy in motion. Maybe you’ve identified a buyer, or you’re considering multiple successors who’ve expressed interest in your practice, or you just decided an hour ago that now is the time to sell. At whatever stage you’re in, your top priority is to protect your clients and deliver a smooth transition that they’ve come to expect after years of working with you. 

Selling Your Practice: When is the right time? (Ep. 2)

SRG Off Script: RIA Tax Considerations with Succession and Selling

Watch Recording https://youtu.be/cUibsAlOPA8 As an advisor, you know that selling/buying a business is a major step for any founder/owner. Between the valuation, timeline, cash flow analysis, deal structure, and contracts, it’s enough to make your head spin. But, one of the most overlooked parts of M&A and succession planning is the tax strategy and how to leverage it to your advantage. Date: Thursday, April 13th, 2023Time: 11 a.m. PST / 1 p.m. CST In this SRG Off Script, we will answer your questions on the various tax considerations when selling a business or sharing equity. If you’ve ever wondered how to maximize the tax result in a sale/merger, how to get long-term capital gains, the nuances of family succession planning and taxes, or even just the right entity structure to minimize taxes, this is the session for you. Submit your question(s) at registration or live during the webinar! SRG Off Script is a monthly webinar series hosted by President David Grau Jr. David along with other industry experts provide insight and address questions related to all stages of managing a financial practice. Have a request for future SRG Off Script session topics? Let us know at registration or email marketing@successionresourcegroup.com Host David Grau Jr. MBA CEO/President Paper-plane Linkedin-in

6 Major Cost Considerations to Sell Your Business

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.

Should I Stay or Should I Go?

The market for advisor practices was set to be a record year in 2020 based on closing 2019 out on a high note, with valuations and deal terms as good as they have ever been. Fast forward three months and COVID-19 has eroded all these gains and left many advisors reeling and re-evaluating. As an advisor thinking of phasing out over the next few months or years, you are probably thinking, “Great, now what?”

Third Time Is The Charm

Financial Advisor, Neil McInnis, shares his exit experience from false starts and unenthusiastic offers to selling his book of Business with Succession Resource Groups Seller Advocacy Program for the best price, fit and terms. Download the Client Success Story to learn more. DOWNLOAD NOW

What to Expect When You Sell Your Business

Selling a business, in any industry, is a major endeavor with far-reaching implications for a wide variety of stakeholders. The first question for most owners is timing – “When should I sell my business?” This is both a personal and financial decision. If your intent is to sell to an internal successor you have or will groom, you will need significantly more time and resources than a sale to a peer/competitor. Internal transitions should start planning at least five years prior to the owner’s planned retirement, where a sale to a peer might only require 3 to 5 years of transition time for optimal results (from start to finish). Regardless of who you sell to, and when you decide to do it, here are a few important items, that if you keep in mind throughout the process, will produce a better result for everyone:

How To Tell Employees You Are Selling The Business

Honesty is the best policy – particularly when discussing your plans after you decide to sell the business. However, when and how to tell your employees is a personal decision and one that must be given the attention and time it deserves. Everyone is inherently averse to change – you have likely seen this in both personal and professional settings, and likely have experienced it yourself. Most people have an immediate resistance to changing the known to an unknown. Understanding this as you consider how and when to position this to your staff is important since you will likely need them until closing, and likely the buyer will need/want them post-sale. There is an entire field of study dedicated to Change Management and understanding how to deal with this issue. The following is a brief primer on best practices employed by your peers to create “buy-in” during times of change: When to say it: You will want to ensure you tell your staff at the proper time.  This is not an exact science and the best time is different for each practice and deal.  In most cases, you will need to inform your staff well before a deal is complete, as you will need their assistance and involvement during due diligence, gathering data, generating reports for prospective buyers, etc. and both you and your buyer may rely heavily on employee(s) to complete this. For most advisors, you will sell your business because you are retiring, which means you have spent many years in the business. Your staff and clients have probably been wondering how much longer you plan to keep working – some may have even asked you. As you think about when to tell your team, know that you finally telling your staff that you are starting the process of finding a buyer/successor may not come as shock to them. Owners are often surprised at how well staff and clients take the news. You may be tempted to keep this close-to-the-vest until you are further along, but you are going to have to tell the team and its best to do it early so they feel they are participating in some way versus being told what is coming. There are numerous studies to support this strategy – making the staff feel they are participating in the decision will support a positive atmosphere in your office, maintain productivity, and reduce/eliminate staff leaving. Divide your employees into two groups: Senior level employees, employees who are part of the decision-making process, or employees who you believe should be retained will likely be notified earlier in the process – often told before you even start considering potential buyers. Your key staff are critical to “get on board” and involved early as employees will often talk amongst themselves and you want your senior level employees to support the messaging when talk with the rest of the team. “Rank-and-file” employees may be notified during the due diligence period. All staff should know before potential buyers show up in your office for due diligence – the goal is to control the message and avoid surprises. Make sure the staff knows how sensitive this subject matter is and ask for their discretion – keeping the possible sale confidential for now so you/they can control the message with stakeholders when the time is right. This is mission critical in small communities. What to say: Explain why you are selling – this may seem obvious, but it is worth sharing your motivations. Share how the sale will impact and benefit the business long term, and most importantly from their perspective – how they will be impacted. Their immediate assumption will be they are out of a job and should start looking now – that might be the case, but you still need them until the deal closes. And, if they aren’t going to be out of a job – this is equally important to communicate. Describe that you wanted to be the one to share the news at the right time and didn’t want them to hear the news from someone else. If you prefer to share the news when you are further along in the process, tell them why. The most common explanation/reason is you wanting to be sure you knew what you wanted and had planned, since this impacts everyone. Share, but do not overshare. Employees do not need to know all of the intricacies in the deal. Your sale price, terms, or other elements are not their concern. Express what you are/were looking for in a potential buyer to alleviate fears/concerns. If they support the selection criteria for their future boss, or can help contribute to the criteria, they are more likely to contribute to a positive result before and after closing. Explain what will likely stay the same Location Employees, their roles, and employee compensation/benefits Client service model and workflows Expected timeline of events Meeting(s) with potential buyer(s) Offer letter Due diligence – important for them to understand this is going to happen and you will have a stranger in your office for a while getting to know everyone. This will often be uncomfortable at first, so its important to plan for it Completion of the sale and what will follow Upon selecting a buyer (usually after accepting an offer, but possibly even before that), have the employee(s) meet the buyer: Use the buyer’s name and have the buyer create a dossier on themselves if they haven’t already, sharing information about buyer’s background (family, background, education, etc.), and current business (employees, location, type of practice) Explain your plans post-closing and your goal to help transition the clients and integrate the employees. How to say it: It is most common to talk with the team members each individually, then again as a group. This allows each team member to have a private conversation with you and not feel blind-sided in a group setting. This also gives each team member time to “digest” what is being said

The Must-Know Items When Buying or Selling a Practice

https://youtu.be/s4VLqDzg9xY Following up on the most recent article, 6 ‘Must-Know’ Items When Selling Your Practice, published by ThinkAdvisor featuring commentary from David Grau Jr., David will share and elaborate on the must-know items for buyers and sellers, and why they are critical to know. The fast-paced 15-minute session will cover: Why selling doesn’t mean retiring Why all-cash deals are becoming the new normal Why practices remain undervalued and what to expect Taxes – how to get the most out of the deal (for buyer AND seller) Profitability and its impact on the value

Due Diligence Checklist

Download Your Checklist! Please enable JavaScript in your browser to complete this form.Please enable JavaScript in your browser to complete this form. Name * FirstLast Phone Work Email *How Did You Hear About SRG? *— Select Choice —ConferenceDirect MailExisting/Past ClientGoogle AdWordsOtherReferralSocial MediaSeminar/WorkshopWebinarWebsite Download Stay on track. Whether you decide to buy or sell a financial advisory practice, it can be complicated and there will be many moving pieces to keep track of and negotiate. Succession Resource Group’s Due Diligence Checklist provides a comprehensive list of some of the most commonly asked for items to review before buying/selling a financial services practice. As you negotiate a deal, due diligence periods typically range between one week up to four weeks, so it is important to make sure you have a reliable list of items to review before consummating a purchase. Using this checklist as a guide with your attorney/accountant, you can be sure you review at least the basic components of the practice and know who you are considering doing a deal with before final negotiations and signing a purchase/sale/merger agreement.