Case Study: Accountancy sells financial advice arm

The background

James Joyce* was the sole financial adviser within a larger accountancy business.  He wanted to structure a retirement that allowed him to capitalise on the value of his clients and retire.  The accountancy business, an LLP, had several partners including James, all of whom agreed that they had no succession plan in place to replace James and would therefore need to sell the clients.  James contacted Gunner & Co. to discuss his options.

The objective

Whilst James was solely responsible for the recurring revenue produced from the advisory clients, his personal stake as a partner in the LLP was minor, meaning any sale of the client bank would only net him a small percentage of the deal value with the remainder to be paid out to the other partners.

James had not factored this in when planning his retirement and had a figure in mind that would allow him to retire comfortably.  James therefore needed a buyer that would allow him to work on with his clients post-acquisition with an agreed remuneration package or be flexible enough to come up with another solution for him.

Gunner & Co.’s plan

Gunner & Co. worked to identify four regional buyers that could accommodate James’s requirements, that also fitted the investment approach and would provide a strong cultural fit for the clients.  Through a review of these buyers we narrowed it down to two introductory meetings, one of which was held at their offices, another locally at a buyer’s office.  Gwill from Gunner & Co. travelled down to their offices to discuss their approach to these meetings in preparation expectations around IFA valuations, and to ensure they asked the pertinent questions to allow them to decide on what would work best.

The deal

One buyer was able to create a deal structure that worked perfectly for James and the other LLP partners.  The accountancy business agreed to set up a Ltd company and move the clients over, which subsequently became an appointed representative of the buyer, with an agreement to buy the Ltd company in two years’ time.  James would continue to service his clients on a generous revenue split, with any continued growth to be reflected in the eventual sale.  This allowed time for a new adviser to be found and ample time to complete a successful handover before the sale, while allowing James to be on a remuneration package that coupled with his portion of the sale value would allow him to achieve his ideal retirement.

 “I approached this process with little to no idea of what was available in the marketplace.  Thanks to the team at Gunner & Co I was able to a buyer that gave me a creative solution.  Thanks for all of your help.”

James Joyce*, financial adviser, Portsmouth.

*Names have been changed!