Aug 24, 2022

InvestmentNews: Maximize your firm’s value by leveraging a G2 adviser

Two women smiling and talking

Building a business that both lasts and is attractive to investors is an art form that requires hard work and a forward-thinking transition plan that looks two-to-five years ahead.

In his latest practice management column for InvestmentNews, his 85th, Allworth Co-CEO Scott Hanson explains why, especially for smaller shops that are run by a single principal or founder, advisors can command a more attractive price on the open market if they at least begin to transition their clients to a next generation advisor before they look for a partnership or sell.

From the article…

Do you plan on selling your practice and leaving the business within the next five years? If so, do yourself a favor and transition your clients over to a next-generation adviser before you sell.

We’ve all seen the record number of wealth manager transactions. And, true, while some of this M&A involves larger enterprises, a majority are smaller practices (with a few hundred million in AUM). Whether you oversee a large enterprise, or you’re a one-person shop, the more completely you can replace yourself prior to the start of negotiations, the better terms you’ll receive.

Let’s look at how most small advisory shops are structured. There’s a founder who was able to identify and attract clients, hire a support staff of one or two people to assist her, and she’s been able to manage the business for cash flow.

This adviser’s compensation is essentially the difference between the revenue and the expenses.

Read the full article at