Success in succession planning

The team at Gunner & Co. have teamed up with Michelle Hoskin of Standards International, AKA Little Miss WOWW!, to co-author this insight piece on the importance of planning ahead.

What, why and when?

Succession planning and your ultimate exit as a business owner can come in many forms. Possibly the most talked about route to exit in the press is a trade sale – by which we mean integrating your business into another, usually larger, financial planning-based firm. This a very popular route for financial planning firms to follow. This gives you the opportunity to pass on the responsibility of running the business, whilst typically giving your clients the opportunity to access additional or enhanced services, such as more extensive IHT planning, or access to discretionary fund management.

However, this is not your only option. There are two other routes that are becoming popular: releasing capital by selling to an investor (rather than a party in your industry), or passing on the ownership of the business to all or some of your staff. This could be through a management buyout, or potentially an Employee Ownership Trust (EOT). Paradigm Norton is an excellent example of a financial planning firm which, in 2019, transferred a majority of its shares to an EOT.

The transfer of 80% of shares in the company to the EOT has given all staff a stake in its future.

Both of these options tend to allow your business to continue with a similar culture and approach – something that is harder to achieve with a trade sale.

Right from the very start, it is essential to identify and constantly question your ‘why’. Why are you doing this? What do you really want to achieve by doing so? Questioning your motivations and objectives can help you understand which options would be best for you, and when and how you should put a plan into place.

We often see business owners who spend more time considering the practicalities of exiting their business rather than focusing on their true objectives and how their chosen exit strategy can complement these.

Given the nature of exit planning, it is likely that you are only going to do this once. Making a success of this involves identifying all stakeholders who will be affected by your decision and reflecting on the future impact to them. This often extends to your family, your team, your clients and potentially many others.

When do you start?

The time to focus on these objectives is now. Regardless of when or even whether you plan to exit, planning ahead is a long process and needs to start years in advance. This way, the strong processes and procedures which would benefit you at the point of exit can be fully embedded so that they become common practice within your business and your team. The good news is that these elements will usually bring improved business efficiency in themselves, therefore your early attention to them is strongly recommended.

The market

Understanding the diversity of the market can help you to understand the type of buyer into which you would consider integrating your firm.

There are many ways to segment the market for financial planning firms. As brokers, our approach at Gunner and Co. is to differentiate buyers by their motivations for growth.

We see a lot of talk in the market around consolidation. Often the focus is on ‘vertically integrated’ firms buying businesses with the intention of moving existing income streams that currently sit with third parties, within the buyers business, thus generating a greater return on investment.

What you may not realise is that by taking multiple bites of the total expense ratio (TER) cherry, vertically integrated firms are able to create a lower overall cost for the client. Quilter Private Client Advisers, for example, can offer clients a full financial planning service for a TER of 1.46% (depending on the detail of the client and precise agreed service level). This often undercuts smaller, ownermanaged practices which struggle to benefit from such economies of scale and bargaining power.

Approaching the market with similar motivations are multi-service, private client-led businesses, such as large accountancy firms.

By acquiring quality financial planning businesses, firms such as Mazars can grow both their financial planning arm and their broader client services functions such as tax planning, personal and corporate accountancy, to name but a few.

This provides their clients with the opportunity of having all their financial needs looked after in one place, simplifying their affairs and potentially moving their ‘trusted adviser’ relationship from a single financial planner, to a full-service firm with a depth of expertise.

Whilst many acquirers in the market have multiple client offerings, leading to an enhanced return on investment, there is also an abundance of smaller, typically regionally or locally focussed firms looking to enhance organic growth through small, well-chosen acquisitions.

Often a smaller buyer will give you the reassurance of knowing exactly who will be looking after your clients as well as a similar local feel to your business. However, their ability to resource an acquisition, be it financial or logistical, should be thoroughly understood.

Some networks offer members an exit route through a ‘practice buy-out’. This is essentially where another member firm buys your firm, funded by the network. In practice this can offer your clients with a certain level of consistency of proposition, however these transactions are not always in line with external business valuations.

Core value drivers

Whilst there is a well established ‘corridor of value’ for financial planning firms, there are certainly some things you can be doing now to reach the higher multiples at the point of sale or exit and often, more importantly, to have your pick of the buyer market.

Make sure you give full consideration to the following points:

  • A best in class client service proposition and defined systems and operations. Being able to articulate your service, systems and operations is the first essential step to getting in front of quality buyers. This can be notoriously hard for small owner-managed businesses as more time can often be spent working ‘in’ the business rather than ‘on’ it. Taking time out to rebalance this (by attending The WOWW! ® By Design Development Programme™ for example) is essential in the years preceding a business sale.
  • Profitability per client. Just like your clients, every buyer is looking to make a return on their investment. Therefore, how profitable each client is, or simply put, the size of their invested assets, will be a core criterion for almost every buyer. Apportioning your service offering to ensure that you are offering an appropriate service level to low net worth clients is important. And that you can demonstrate it.
  • A defined investment proposition. How financial planners develop their investment proposition is much debated within the industry – everyone has a different way of doing things. However, bearing in mind my first two points, your investment approach should be consistent, clear and auditable. Financial planning and investment management are two separate disciplines. If you are picking funds for a significant number of clients be prepared for a greater level of scrutiny during a due diligence process with a prospective buyer in future. The reality is that, post-sale, this will be managed by an investment specialist. Good comes in many forms, but at the core should be a strategic rationale, clearly defined execution and a consistent approach.
  • Your team structure. How you have built your team and how client relationships are managed can make your business more – or less – desirable to a buyer. Put simply, a team of self-employed advisers makes transactions complicated, reducing the pool of interested buyers. Equally, if client relationships are concentrated within a small number of individuals, who don’t own the company, a buyer may question where the intrinsic value of the business lies and what you actually have to sell. Conversely, clients who are used to multiple touch points and a high level of service are more likely to associate their relationship with the business than a single adviser, and therefore transition to a new organisation. This makes your business more attractive to a buyer. Take time now to think how broad your client relationships are across your business – a reliance on one-to-one relationships can be considered a point of risk to a buyer.

All of this can be considered excellent business management – a core deliverable to firms going through the WOWW! Programme.

Planning and timing

Time is everything in planning – treating your business exit as a core element of your business plan over a number of years will allow you to control your exit and meet your objectives.

Getting your business in shape 3+ years out and defining your goals for a sale is essential to this. As is building your team of expert advisers (accountant, broker and solicitor). You wouldn’t want your clients to manage their own financial plans, nor should you embark on this without advice!

Common pitfalls

  • Not questioning your ‘why’
  • The blind leading the blind – not using professional advisers
  • Don’t forget buyer due-diligence – especially on small buyers who don’t have a proven track record
  • Not managing your own expectations, especially around the value of your business
  • Not putting yourself in the buyer’s shoes and considering their motivations


Selling your business is part of its lifecycle, and part of your personal journey. Taking time to plan and define this journey, with help from experienced advisers can transform the experience from being quite daunting into something as well executed as the business you’ve dedicated your time to build.

What next?

If you are thinking of selling your business in the next 3-5 years, your best course of action is to attend a Gunner & Co. workshop, to fully understand to process, followed by a business review by Standards International. This will allow you to define a realistic plan to maximise the value of your business at the point of sale.

Contact Louise Jeffreys at Gunner & Co. ( and Michelle Hoskin at Standards International (