Tips for Selling Your Advisory Business


Building a business is something to be proud of, but there may come a time when you sell your company to someone else and enjoy the next chapter in your career or even retirement.
Selling a financial advisory business can be a particular challenge since you’ll want to sell your company to someone who understands the value of your business and who can carry on your legacy once you transfer ownership.

Here are some tips to follow if you’re thinking about selling your advisory business:

Decide When You’re Ready

Before you consider selling, you need to decide whether you’re ready. How will the sale of your advisory business align with your future plans? Are you preparing to retire? How will you earn income once your business is sold? Are you satisfied with what you’ve accomplished?

These questions aren’t just for your benefit. Having a clear plan can give you peace of mind and help you think more clearly throughout the sales process, so you can avoid making decisions out of desperation or uncertainty.

Perform a Formal Valuation

Some business owners may prefer to have a third-party perform a formal valuation to determine the financial worth of their business. Of course, if you’ve built a financial advisory company, you likely have the skills to perform your own.

The simplest form of business valuation will assess your assets and liabilities, which is known as the “book value” of your business. Your assets can include your assets under management (AUM), annuity assets under management, life insurance, or other assets.

Alternatively, you can assess your value by comparing your business to comparable companies in your region or sector. Some business owners may want to employ several methods to provide a comprehensive portrait of their company’s worth.

Keep Careful Records
Ideally, you should be keeping clear records throughout the life of your business, but it’s particularly important when it comes time to sell.

For starters, accurate bookkeeping practices will make it easier to perform a formal valuation of your business. But having thorough records can also improve the value of your business in the eyes of potential buyers.

Trends in revenue growth can make your company uniquely attractive to the right buyer. Similarly, having a database of current clients or potential leads can also add value to your company.

Consider a Transition, Not Simply a Transfer

If your business has grown over the years, you may want to consider finding a way to transition to new ownership rather than merely ride off into the sunset. This approach ensures at least three things:

● Existing debts and obligations are covered
● Your company maintains its current customers
● Staff keep their jobs and continue under new management

In fact, having existing staff and a customer base can increase the value of your business in the eyes of potential buyers.

Have Standard Operating Procedures in Place

When you have a set of established operating procedures, you’ll have an easier time demonstrating to buyers that your company can be run efficiently and profitably with minimal supervision.

It also means that a buyer can take the reins of the company while maintaining your current activities, preventing any significant loss of income during the transition period.

This approach also means that the buyer can adopt your operating procedures as they take on a management role. If they should add staff, you’ve already got policies and procedures in place for doing so, as well as the means to integrate new hires into the workplace culture.

Think About What’s Next

Transitions can be exciting. They can also be scary. Planning for what’s next can be important for you financially as well as psychologically.

At Ty J. Young Wealth Management, we are always in the market for our next acquisition. Having acquired more than twenty financial practices in the past few years, we’re always open to considering an acquisition.



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