Getting Top Dollar For Your Financial Planning Firm: A ‘Cheque’ List for Success

As noted in Investor Daily, professional services businesses can be tough to value. It’s hard to place a dollar value on the relationships clients have built up with the Principal over the years and the overall goodwill of the practice.

Still, there’s a few matters you need to consider before you get that precious cheque in hand.

Here’s a ‘cheque’ list of what should be top of mind if you want top dollar for your financial planning firm.

  1. Leave on a high note

As reported in Forbes magazine, the best time for you to sell your business (that is, when sales and profitability are on an upswing) also happens to be the time when you are least likely to part with it.

Buyers are pretty savvy. If you try to sell when the numbers are stagnant or declining, they’ll be onto it in a flash. Buyers want to pay for what the business is worth right now not what you think it may be worth in the distant future or what it was worth in the ‘good ‘ole days.

To maximise your chances of getting a knockout price, review any expenses to see what can be trimmed and make sure your sales team and growth strategy is watertight. The most recent financial year will be what counts the most and buyers will pay far more for a growing firm than a static one.

So leave the building when things are really hot! It’s kind of like leaving the party when the cocktails are flowing, the laughs are getting louder and the buzzing party vibe is at its best. If you leave on a high note, you’re looking at a much higher price.


2. Don’t be a slave to the traditional numbers

As seen commonly in the sale of practices with recurrring revenues of less than $750,000, the price paid for a practice is often based on the recurring revenue and expressed as a multiple and compared against what can be seen in the marketplace. It’s a peer-based or market-based type of approach as the asset being acquired will be integrated with an existing business and the EBIT for the acquired asset can’t effectively be measured for the earnout payments.

Smart sellers and buyers understand that selling a business is more than just a recurring revenue multiples or standard EBIT calculation.

When you’re deciding what price tag to put on your planning practice, take into account the goodwill of the firm, the intellectual property, profitability history and the current and future cash flow as well as any real or perceived strategic benefits or synergies that might tip the buyer over the line.



3. Look at your client base demographic

According to the 2015 Intergenerational Report, 3.3 million Australians were aged 65 and over in 2013, a figure which is reported to double that figure will double by 2055. If you’ve got an ageing clientele on board, you need to consider potential, alternative sources of revenue to give your prospective buyer some comfort about future growth.

If the buyer can see that the revenue may fall sharply, then the value of the business will likely drop too. Employ strategies to win new clients and battle the ageing baby boomer challenge.


4. Plan, plan, plan

We can never say this enough: plan for success!

Sometimes practice owners tire of running their practice or feel burnt out so they make the decision to sell. This is when proper planning really falls down the drainpipe.

To plan an effective sale strategy and ask top dollar for your firm, you need to ask some key questions:

  • What key business data will buyers want that you don’t normally track?
  • What marketing and business development plan is in place?
  • How smooth are your business operations?
  • Is everything well documented – policies, manuals, employee KPIs, etc?
  • How much of the business knowledge is in your head and not written down?
  • Do you keep accurate and complete records?
  • Is your electronic customer database up-to-date?
  • What documents will I need to help sell the business?

If you haven’t got this mapped out, do it now. Buyers will be much happier to fork out a larger cheque if they know everything is in order and that the transition will be an easy one.



5. Presentation is everything

Imagine this:

You’re on the hunt for a brand new family home. You walk in on open inspection day and there’s dirty floors, hairy cobwebs on the ceilings and a overflowing rubbish bin in the kitchen. There’s odd bits of trash lying about and a broken bed frame left in the master bedroom. The grass in the backyard looks so long and overgrown, Edward Scissorhands would struggle to make it look good.

Would you be enticed to buy? When your business is for sale, presentation is everything. It’s like getting ready for a first date. Dress it up, pop its best outfit on and make it look effortless. Get the books and record in beautiful order. Most sellers poorly prepare for a sale in the area of constructing a sales document (Business Profile or Information Memorandum). Whilst the sale of an advisory business is the sale of an intangible asset (there’s no building or physical office to touch and feel), the way you represent the asset in documents is a critical element in maximising sale price.



6. Step into the driver’s seat

Look at everything with fresh eyes – namely, buyer’s eyes! If you were opening up you own wallet to purchase the business and spending your hard earned cash (without the benefit of your assumed knowledge and industry experience) what would you be worried about? What strategy would you put in place to make the firm thrive?

Apply the same degree of scrutiny as an interested but sceptical buyer and you’ll be in a much better negotiating position to demand the best price.



7. Watch the clock

As Gordon Gecko once said, “money is not the prime asset in life. Time is.” Talking to the right prospective buyer at the right time can be all the difference. Make sure you follow them up a timely fashion and, if necessary, employ a sense of urgency so they don’t lose interest and move on. And remember: in this market there are generally more buyers than sellers which means sellers are often pursued by buyers. When they come knocking at your door, it’s best to be ready.



With a bit of homework, the right preparation and planning, the right timing and the courage to move on when you’re on a high, you’ll be in prime position to receive the best price for your financial planning firm.

Just don’t be the last man standing on the dance floor when everyone else has gone home.

We’re holding a webinar on 8 February 2017 – head to our registration page for more details. In the meantime, download our free ebook on maximising your practice sale price:


Chris Wrightson. Founder and CEO at Centurion Market Makers, the industry experts in the sale, acquisition and management of financial planning firms. If you’re planning on selling your firm in 2017, we’d love you to call us for a confidential discussion, or continue browsing our website for more tips, tools and info on the steps to take when buying or selling your financial planning firm.

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