What do buyers of financial practices look for?
Strategic Issues

What do buyers of financial practices look for?

February 6, 2013

by Tony Vidler

What do buyers want?

Recently I discussed the irony of many financial advisers not understanding how to get a better return on what is often their biggest investment – their practice.

We highlighted areas where advisers can grow the value of their business – and get that better return they dream of when selling.

If you were buying a financial advisory practice what would you look for in order to determine whether it was a good “buy”?

We touched on some of this earlier of course, but there are other factors that a buyer looks for that make a practice a good investment for them.

Here is a list of factors that make a practice particularly attractive to a potential purchaser:

  •  Service propositions clear & process driven
  •  Differentiation in service offerings & clear client segmentation strategy
  •  Key revenue drivers & client profitability understood and measured
  •  Clear pricing strategies that are sustainable
  •  Fully compliant processes
  •  Range and depth of business relationships
  •  Quality and sustainability (persistency) of in-force business
  •  Effective and sustainable marketing systems
  •  Management systems and reporting (especially financial)
  •  Staff – both support and front-line advisory – experience, quality, qualified, stability.
  •  Strong positive business cashflow after any financing costs
  •  Practice management systems and processes

A clear strategic value proposition that fits with the buyers own market positioning is a must for the discerning and commercially-savvy purchaser.

Usually such a purchaser will also be ideally wanting something better than mere “compliance” – they want best practice in as many areas as possible.  That extends well beyond just the “advice” processes.  Best practice in management reporting, staff training and qualifications, service and communications process, and so on is on their ideal list.

There is value in adopting a best practice approach to building your practice – especially the value that can be obtained when it’s time to sell!

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