To sell your financial planning firm, you need to think about more than just the numbers. You’ve only got one shot to sell to the right buyer.
The entire process can turn into a daunting experience if you lack the understanding of how to identify the ideal type of buyer and without the experience and industry connections to find the best match.
Making sure there’s cultural and strategic fit is the primary ingredient in a successful sale and transition out of the business.
It’s a courtship of sorts – you’re about to hand over an extremely important personal and financial asset so you want to be certain they’re on the same page and ready to commit.
Here’s some tips to ensure your buyer is a good strategic fit for your business.
1. Assess your company culture and corporate strengths
Honing on what makes your company tick and what your firm is really good at will help you find the perfect buyer. Is your culture laid back and casual? Or is it more conservative or ultra-corporate? Is the buyer’s vision in line with your company philosophy, mission and values?
As reported in the Entrepreneur, poor fits between companies and buyers turn into drains on resources, time and morale. You need to be prepared to walk away from a bad corporate fit to avoid a costly mistake.
2. Be patient: you have choices
According to Deloitte’s Advice Based World report 2015, as decisions become more complex and more time-consuming, the demand for advisory-based services will increase. And it appears to be a myth that there is giant wave of baby boomer advisors ready to retire and sell their financial planning practice.
Across Australia, there are still more buyers than sellers for accounting and financial planning businesses and this has been consistent for the last 5 years. And as advisory work is financially and personally rewarding business, it tends to be a ‘die with your boots on’ kind of industry where many advisors continue to practice for a long time.
When the time comes to sell, you likely have many choices when it comes to finding the perfect buyer for your planning firm.
3. Make it a philosophical and cultural match
Philosophy and culture are the key drivers behind a successful financial planning firm.
Clients and staff are attracted to what you stand for and the values that underpin your business. Having a shared system of beliefs is often underestimated in the world of advisory work. Do you have a clear financial planning philosophy? What are your firm values? And does the buyer share the same ideas and beliefs?
Selling the firm is a decision which affects your employees but also your clients. Ultimately, your clients will leave if they’re not happy with the match and, in turn, this affects the sale and value of the business. If your valued clients leave, everybody loses out. Both the buyer and seller could lose significant money and the price of the firm may tank due to more retention risk.
4. Decide what type of buyer you’re looking for
There are three potential type of buyers: financial, strategic and owner/operator.
- Financial buyers include family investment offices, hedge funds, private equity or venture capital firms, and other businesses that buy, improve, and sell other businesses.
- Strategic buyers are the ones that seek to buy your firm so it can “tie in” with and improve their existing business model and structure. They may be a client, competitor or supplier of your planning firm and want to access greater resources and talent, reduce competition or create business synergies.
- Owner/operator buyers include anyone (one of your employees, entrepreneurs, managers) who views your business as a means to lifestyle or job security.
These types of buyers may not be able to nail down financing as easily but they could prove to be more reliable, trustworthy and invested in the business, particularly if they have been working for the firm for a long time. Thinking about what kind of buyer is the right fit for your firm will help speed up the negotiations and sale process right from the start.
5. ‘Date’ your buyer
Remember the Aussie TV show ‘Perfect Match’? The quintessential 80s dating show (with a fair amount of scripted jokes and sly innuendo), it involved the prospective dates answering questions to see if they were the right match for each other.
When selling your business, it’s kind of like the dating game. Of course, you don’t need to gaze into each other’s eyes over a candlelit dinner or take long walks on the beach. And there’ll be no ‘Dexter’ around to calculate your compatibility score.
But you should conduct interviews to evaluate potential buyers to confirm their ability to finance the deal, and to see if they’re a good strategic and cultural fit. When you meet with your shortlist of buyers, you can ask a whole range of questions aimed at assessing their overall financial philosophy, suitability to lead your practice and their cultural alignment.
6. Trust your instinct
Deloittes’ 2015 report noted that “the demand for trusted advice grows but confidence in the supply of trusted advisers is challenged. We see an optimistic future for those with the awareness and ambition to re solve this mismatch.”
You don’t want to hand over your precious business baby only for it to fade away due to poor management or lack of vision.
When you meet with the buyer, consider whether they are invested in continuing a culture and team of ambitious, innovative and trusted advisers into the future.
Above all, go with your gut. You know your business inside and out and if it’s not feeling right, then trust your instinct.
And if it’s not feeling 100% right? Just tell them you’re not ready.
“It’s not you, it’s me,” you’ll say when the courtship comes to an end.
Finding a good strategic buyer fit will be the best thing you’ll ever do: for you and the longevity of your firm.

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