In recent years, the options for Independent Financial Advisors (IFAs) looking to sell their businesses have expanded significantly. Previously, large national consolidators were often the only option for IFAs considering a sale. While these national firms are still active, the marketplace now includes a variety of buyers, allowing sellers to choose the best fit for their goals.

If you want to understand your sale options and what the timeframes around a sale are, especially against the increasing rate for BADR, listen to the opinion fron our head of brokerage Gwill Evan here. To get more tailored acvices,  book a market overview with us here.

Considerations for Younger vs. Older Business Owners

For younger IFAs who are at a point where they would like to de-risk and sell their business to work on while taking “some money off the table”, they may prefer to work with a larger business with an established track record and sometimes the financial backing of a private equity firm.

For older owners who are focused on the legacy of their businesses and perhaps are less sensitive to the ultimate valuation of their business, there is the opportunity to partner with a regional firm. Firms which are greater than one-person operations but are not national in their reach have become more popular in recent years.  These regional firms will usually have begun as more modest operations but have over time grown both organically and through M&A to become more professional in terms of their infrastructure and technology.  Regional firms will typically have more than one office in a region and have a track record of completing a number of acquisitions in the past.  They will be much smaller in scale and have a very different cultural feel to national consolidators.

Concerns on Cultural Fit and Funding

Firm culture will vary from business to business, but regional IFA acquirers typically will be focused on a particular geography and look for businesses that share similar values and service models.  Given the relative “family feel” nature of these firms, they offer a strong alternative to IFA sellers that do not like the concept of selling to a large business which are more corporate structure in nature.

Additionally, regional firms can be more flexible in their acquisition approach, but they may be more constraining in what they can offer commercially when compared to national acquirers.

One common concern from vendors is the ability for an acquirer to complete the transaction and make payments on time.  Firms that operate on a regional basis will typically have funding in place sometimes via a bank, a private equity sponsor or a long-term capital partner, alleviating any concerns of ability to close.

Evolvement of National Firms

Gunner & Co covers the breadth of the market and is increasingly seeing appetite from vendors to transition their businesses to this regional type of firms that are more like theirs in size and scale.  At the other end of the spectrum, larger national or quasi-national acquirers have continued to diversify in nature, with different acquisition models and approaches to vertical integration.  Where in years past national firms would be labelled solely as “consolidators” due to close similarities in approach, there are now multiple strategies in play, from traditional product distribution to ‘buy and build’ and ‘hub and spoke’ models.  Additionally, not all buyers are looking to initially take the full 100% of the selling company, with an opportunity for some owners to sell their businesses in stages, while solving some of the headaches associated with being directly authorised.

 

As the marketplace continues to diversify in terms of buyer type and approach, prospective vendors are afforded more choice in both who they sell to and the exit scenarios that are available to them.  When planning an exit, business owners should look to first understand what options are available to them to help define their sale objectives.

If you are looking to sell your business, find out more about the selling process and how Gunner & Co. can help you. Book a meeting with us.