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Prepare your Practice for the Next Chapter
2018-11-27 • 3 minute read

Don't Sell a Book, Sell a Business

Many advisors who sell a financial services practice are really only selling a book of business, not an actual business. What is the difference between a 1X transaction and a 2X or better multiplied transaction? Well clearly one of the most important issues is the quality of the client relationships. That has been proven to be just as important as the quality of their assets. How loyal are the clients based on how they have been served to this point of the relationship? Have they simply bought investments, or are they bought-into a professional process? Metrics on empowerment, referrals, demographics and commonalities, commissions vs. fees and several other issues are key as well. 

Put Time on Your Side

The bottom line is it is essential that you get out-front and be well prepared to multiply the value of the asset and make the outcome as smooth and predictable as possible. Deploying a process demystifies the experience and ensures there is minimal opportunity leakage and that you don't squander your time.

There are More Sellers Than Buyers

As a seller, when you tighten up your business through organization and structure as well as essential best practices, you unlock hidden value in your business that differentiates you from all the others with similar aspirations. In 12 months or less you can execute a panoramic practice management process that a suitor will recognize as extremely valuable. Remember what a buyer wants; only pleasant surprises. They want the transition to be smooth, and the integration into their core business to be virtually effortless.

Many buyers in the past have acquired sketchy books thinking there was a vein of gold or all kinds of low hanging fruit just waiting to be uncovered. As a result, the buyer was fixated on the price of the acquisition rather than the quality of the asset resulting in an outcome that spiraled downward. With the benefit of hindsight came a lot of regret.

Dig Your Well Before You're Thirsty - Confucius

Remember, quality relationships last long after you paid for them. So get clarity on the issues that will impact your transaction and get organized with a plan and process. As a potential seller, the longer you wait and the less prepared you are, the less value you will get from your asset. Preparation will help you squeeze more juice out of the orange.

Continued Success!

Contributed by Duncan MacPherson

Take Action:

Maximize the value of your business! Check out the Pareto Systems 'The Multiplier Method' one-on-one consulting program!

The Pareto Systems Multiplier Method Program focuses on advisors who are considering buying or selling a book of business, and maximizing the enterprise value of the transaction from either end.

Visit our website to learn more: https://www.paretosystems.com/the-multiplier-method.html

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