Selling your IFA business – Advice from a decade of dealmaking

With 50 acquisitions under our belt and a decade of experience in the marketplace, it’s safe to say we’ve learnt a lot over the years. Drawing on a decade of deal-making expertise, I’ve pulled together our top 10 tips for selling your IFA business; what works, what doesn’t and how to get your business in the best shape possible.

Start planning in advance

First off, whether you’re planning for a future exit, or looking to release capital value and remain operational, every business owner should start planning years in advance. After all, you don’t start thinking about your pension when you are about to retire.

In the words of Walt Disney, “the way to get started is to quit talking and begin doing”. Also, life events can have a habit of coming around unexpectedly, meaning you may need to bring the planned date of sale forward – so be prepared.

Understand Shareholder Aspirations

Shareholder alignment isn’t necessarily about everyone having identical requirements, but more about having a plan that all shareholders have bought into and agreed on. This prevents nasty shocks, surprises or fallouts in the future should you come to sell your IFA business.

Marketing the IFA business for sale

Industry-specific M&A brokers and corporate finance houses can help market your business for sale and make introductions to acquirers. As most brokers are paid by acquirers and corporate finance houses typically paid by sellers, sellers usually favour a broker. But it’s worth talking to both before appointing anyone. And a word of warning – not all brokers are whole of market and independent, favouring buyers who pay retainers or the largest introductory fees, so do your research.-

Culture Really Is King

A company’s culture means many things to many people but in essence, it’s a company’s core values and cultural alignment between the seller and acquirer is key.

If you can’t work with the people pre-acquisition, post-acquisition will be no different so engage with as many staff members across different departments and levels of seniority as you can within the acquiring firm and look at staff, adviser and client retention figures.

And first impressions do count; ask the right questions, and always trust your gut.

Ensure due diligence when selling your business

Due diligence is an essential process for prospective acquirers and it can be intrusive, time-consuming and frustrating, so you must go into this with your eyes wide open, ready to embrace the process and comfortable with committing the resources to get through it.

Be prepared to present the business you WILL BE and NOT the business you have been

Increasing attractiveness to potential buyers will help you command the best possible price when selling your IFA business. Businesses should be professional and corporate, from premises to company paperwork. Review and formalise staff contracts, scan paper files electronically, resolve any legal or regulatory disputes, and make sure all financial data is accurate and readily available.

And have vision; demonstrate your commitment to drive and grow the business to be the best it can be.

Finding the right deal when selling your IFA business

This starts with all agreeing what the right deal looks like – from type of sale, aspirational capital value and preferred payment structure to what the future is for shareholders, staff, advisers and clients.

Be realistic and flexible; the best deals are where buyer and seller walk towards each other to reach an agreement.

Human capital and aligning key individuals

Don’t underestimate the value of the people within your business and the part they have played in the success of the firm to date – ensuring all key members of the team are committed to the business post sale is crucial.

Clients will also have strong relationships with people in the firm and any changes to this can, especially if it coincides with a sale, cause unrest among your clients, so a seamless transition with everyone on board is important.

Engage and pay for the very best professional advice you can afford

Professional advisers will support you through the full sales process, from getting your business in shape to be presented to buyers, ensuring company information is tidy and readily available for due diligence to advising on the acquisition agreement.

Don’t get hoodwinked by the headline numbers, look at the overall deal structure

The acquisition agreement sets out the agreed terms of the transaction and the mechanics of the deal and will typically contain a number of provisions designed to protect the buyer.

This will include standard provisions like warranties, indemnities, disclosures, and restricted covenants, although some buyers add further challenging provisions that are designed to generate more profit for them, so make sure you are comfortable with all provisions and that they don’t place undue risk on you.

In essence, selling your business should be something you plan for when you don’t need to sell and you should look to sell the business you are going to be, not the business you have been.

This will help you to ultimately achieve the optimum sale value for your business, that recognises your years of hard work and endeavour.

Interested in selling your IFA business?

To find out more about how our unique acquisition model could work for you and your organisation, speak to a member of our M&A team