To help financial planning business owners who are ready to sell, we invited an experienced buyer – Sam Ward, Head of Mergers & Acquisitions at Perspective Financial Group to talk about their expectation to help you prepare.

Timeline and Process

Louise Jeffreys: Let’s start with the basics. Sam, from your perspective, how long does a typical transaction take?

Sam Ward: from a buyer standpoint, we have better control of the timing once heads of terms are signed, the due diligence and legal stages usually take three to four months. After that, it typically takes another three months to complete the transaction, especially for share deals involving regulatory approvals.

However, the preparation phase varies greatly, depending on where you are on this journey, the complexity and the size of your business. If sellers are well-organized, the initial stages can move quickly. But for those starting from scratch, the whole process could take up to two years. You are only going to do this once, and you should make sure that you have invested properly in the early stages because you want the last few steps to be as smooth as possible.

Louise Jeffreys: That’s a great point. Sellers should understand that preparation is key. Proper preparation ensures no surprises during due diligence. Momentum is important to avoid deal fatigue.

Setting Objectives

Louise Jeffreys: What’s the first thing you ask sellers in a meeting?

Sam Ward: We always ask, “What does good look like for you?” That includes goals for clients, staff, shareholders, and the business as a whole. Clear objectives lead to better conversations and outcomes.  The first meeting is for us to try to establish what the utopian outcome is for the vendor.

Louise Jeffreys: Some sellers aren’t sure about their objectives initially. And as I said when I started, I had a lot of people saying, “I don’t know what I don’t know.” I quite often get people who say, well, I might work on, but I might retire.

Sam Ward: We see there are 3 types of vendors.

The first is someone who knows exactly what they want from the transaction—clear on timeframe, shareholder objectives, clients, office, staff, etc. The second is someone who is open to all options and hasn’t really thought about it. The third type is somewhere in the middle—flexible, but with some framework around their needs.

We wouldn’t expect that you know 100% before the first meeting, but we have a better conversation where there is a good idea of the end state.

Business Valuation

Louise Jeffreys: How can seller balance what the business is going to be worth and other non-financial objectives? We’ve gathered data from past transactions to understand market multiples, and we saw a peak in 2022 followed by a decline in 2023 due to rising interest rates and borrowing costs. Now, as we move into 2024 and 2025, it seems the market is stabilizing. Sam, how are you feeling about current competitive tension when making offers?

Sam Ward: The 2022-2023 period was challenging acorss many sectors, driven by macroeconomic factors like higher interest rates and inflation. During 2020-2021, many new buyers entered the market with deep pockets, but the reality of managing and integrating acquisitions has been a challenge. Recently, we’ve seen some renewed buyer interest, with some marginal upward movement in valuation expected from 2024 to 2025.

Louise Jeffreys: Last year, when prices dropped, it felt like a correction back to normal. Historically, the typical valuation corridor has been around 3.2 to 3.7 times. Do you think this is just a return to normal, or is the norm changing?

Sam Ward: I don’t expect a dramatic upward shift like in 2021 and early 2022. While competition is rising again, any increase will likely be gradual rather than sudden as the market is more mature now.

Louise Jeffreys: Back in 2019-2020, private equity firms showed great interest in platform businesses. Now, many of those new entrants are struggling to meet acquisition goals. Do you expect consolidation among these buyers?

Sam Ward: Absolutely. Many businesses that took private equity money in 2020-2021 are reaching the end of their current investment cycles. We’ll likely see more platforms coming up for sale, along with some new private equity entrants. This could lead to more transformational M&A in the next couple of years.

Build Your Deal Team

Louise Jeffreys: Sam, from your perspective, who are the most crucial members of the deal team to get a transaction done effectively?

Sam Ward: A good broker is essential, but it needs to be the right broker—one who builds long-term relationships, understands objectives, know the buyer universe and helps with preparation. It’s important to take references when choosing a broker to ensure they offer a full view of market options and prepare the business thoroughly.

A good solicitor is also critical, especially towards the end of the transaction for legal negotiations. Early on, they might help resolve legal or structural issues before engaging buyers. Due diligence experts are helpful, particularly when the firm’s size makes it hard for internal staff to manage both daily operations and preparation for sale. Accountants are useful for handling tax implications and deal structuring, but their involvement depends on the complexity and resources of the business.

Louise Jeffreys: Having the right broker can also guide you in finding the other necessary professionals, where appropriate. From my experience, many successful sellers emphasize the importance of having that trusted advisor.

One thing sellers often underestimate is how challenging it is to balance running the business while preparing for due diligence. You may find yourself working on your day job during the day and on the transaction in the evenings. It’s essential to plan ahead and be prepared for this dual workload.

Data Preparation

Louise Jeffreys: Let’s talk about data. We’ve left this topic for last, but I know you feel strongly about it, Sam.

Sam Ward: Data preparation is vital, and we categorize it into three types: financial, regulatory, and legal. The most significant challenge is having a comprehensive client database. A well-organized client database should include information about households, assets, investment plans, platforms, fee structures, and income. Ideally, it should be accessible with just a few clicks through a reliable CRM system. Unfortunately, many firms still use outdated methods like Excel, which can delay the due diligence process as they try to compile data manually.

Regulatory data, particularly annual review diaries, is another common issue. The FCA requires evidence of client services and reviews, and without proper documentation, it’s considered non-compliant. We’ve seen firms manually reconstruct records from calendars, which significantly delays the transaction process.

On the legal side, basic issues like share issuance, EMI schemes, company records, and property ownership need to be resolved before starting due diligence. If there are discrepancies, it could add months to the transaction timeline.

Louise Jeffreys: That’s really useful insight. Having well-organized data not only makes the transaction smoother but also reassures buyers that the business is well-managed. Thanks for highlighting that, Sam.