Five Myths in Succession Planning that Lead to Mistakes
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:
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?”
Secrets to a Successful Succession
Great article from Matthew Halloran on succession planning. He makes 10 good suggestions for buyers/sellers to be thinking about, here is a quick summary:
Create a Simple Succession Plan
Every business and client base is unique. But, there are some common core elements for advisors to consider if they want to begin developing a succession plan or internal ownership track for the next generation. We have seen and developed a wide variety of plans for our clients and know it’s easy to get bogged down in the details or let these types of plans become overly complex and “die on the vine.” Our recommendation? Start planning sooner rather than later, and keep it simple.
Succession Planning Help Is On The Way
Change is hard. No one likes it. So it is no surprise that so many advisers avoid the subject of succession planning. Both a Cerulli Associates study and polling by the Financial Services Institute found that almost 60% of advisers have not yet identified a successor. Yet every year more advisers get closer to their inevitable transition. An estimated $2.3 trillion in assets is controlled by advisers over the age of 60.
Top 10 Tips: Succession Planning for Insurance Agencies
After witnessing hundreds of agency leadership transitions, whether it’s planned, forced, tragic, or amicable, change in leadership is always difficult. You may think you have all your ducks in a row, then one will fly off on you. Here’s some help finding what could work for you:
Sutley Wertzer: Looking Back One Year After Transition
Sutley Wertzer, Inc. Looks Back One Year After Acquisition Seller & Buyer Success Story Based on SRG’s most current data, demand for advisory practices remains strong with more than 50 buyers for every seller. But, the highest values and best successors take time and effort to find. SRG’s seller clients receive on average 3 to 4 offers and 33% higher sale prices than self-negotiated deals. SRG’s Seller Advocacy program is the best solution for advisors looking to exit the business, helping you develop a group of elite buyers to select from and get the best deal for your practice. This client success story is a great example of how one advisor was able to find a great buyer and great deal, while still creating a win win for everyone involved. DOWNLOAD NOW
Due Diligence Checklist
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. DOWNLOAD NOW
Effective Strategies to Exit Your Business
https://youtu.be/8tFf9s7y54c How do you plan on exiting your business? Succession Planning can mean different things for you and for your peers. While it can be done internally within the team or sold externally to an industry peer, it requires a different timeline, planning, and strategy. Whether you plan to slow down and retire now or in the next 5-10 years, this session will discuss: The Levered Buy-In and Shared Growth Model (SRG’s award-winning solution), the two most effective strategies for internal succession The most popular exit strategy for external sale The four most common succession pitfalls every advisor should avoid Join us to learn more and start your succession plan now!
Succession: The One Thing
https://youtu.be/-Y-u7jbhQuY Practice valuations are at records levels driven by strong market conditions and significant buyer demand. It should be assumed that when an advisor wants to retire, they will get a great value, great payment terms, and have numerous successors to choose from. Yet most advisors get a fraction of what they are worth, and never fully evaluate their potential pool of successors. This 20-minute session will tackle THE ONE THING your broker-dealer and custodian(s) is doing that is inadvertently killing your value and how to avoid the issue! Fill out the form to register watch this webinar on demand.