6 Essentials to Pick the Right Buyer for Your Practice

I’ve just begun  a three-part series for ThinkAdvisor on selling your practice. According to Cerulli research, 43% of advisors are 55 or older.

Many have no succession plan. As  financial advisor recruiters, we speak with advisors  like this every day. It occurred to me that they could benefit from a practical discussion of this topic. In order to write this piece, I had lengthy, in-depth conversations with Matt Brinker of United Capital and Mark Penske of United Advisors.  Both have extensive experience in the purchases and sales of advisory firms. They were both very generous  in sharing their knowledge and time with me and I thank them very much.

The next article will be about what  sellers should keep in mind when they  structure deals to sell their practices.  In the final piece , I’ll interview advisors who’ve sold their practices or firms to find out what they learned from their experiences.

Here’s the start to the first article:

Choosing a buyer for your advisory practice should be a piece of cake. The number of buyers vastly outnumbers that of sellers, so you should simply sell to the highest bidder, right?

In most cases, that would be a costly and irreversible blunder, because much of the value of the deal comes in back-end payments. Thus, advisors need to do the due diligence to be sure that a potential buyer can live up to his or her promises. Once an advisor sells a firm or practice, there are no “do-overs.” You have to get it right the first time, because your retirement nest egg is riding on it.

via 6 Essentials to Pick the Right Buyer for Your Practice.

About Mark Elzweig

I am an executive search recruiter with an inside track on financial advisors, the asset management industry, and Wall Street. My work has appeared in numerous publications including On Wall Street,AdvisorOne, and Fund Fire. Journalists regularly seek me out, so you catch my bon mots in The Wall Street Journal, Research Magazine, Reuters, and more. You can follow me on Twitter @elzweig or you can reach me directly at 212-685-7070 or elzweig@elzweig.com.
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3 Responses to 6 Essentials to Pick the Right Buyer for Your Practice

  1. Jim Eccleston says:

    Hi Mark, Nice series. I’d like to repost with attribution to you. Is that okay? Thanks. Jim

    Sent from my Verizon Wireless 4G LTE smartphone

  2. Erwin says:


    Your post brought to mind Live Oak bank. I believe that funding is a very significant issue during practice acquisition.

    Live Oak Bank is worth knowing about. It may be a useful resource.

    Excerpts below are the most relevant from the website.

    Tuesday, November, 20, 2012 – Wilmington, NC – Live Oak Bank is proud to announce a major commitment to providing much needed financing in the Investment Advisory industry. After extended industry research, Live Oak has gathered a team of lenders and industry experts to address the gap in financing for Independent Investment Advisors. The Live Oak lending product offerings include merger & acquisition, succession funding, partner buy-in/out, expansion, operating capital, refinance, loan payoff, start-up and real estate. – See more at: http://www.liveoakbank.com/2012/11/live-oak-bank-continues-to-evolve-with-new-investment-advisor-financing-vertical/#sthash.FaQOjGlx.dpuf

    *** “Through leveraging the success of other LOB lending verticals, the bank is able to view collateral differently coupled with their niche industry focus. – See more at: http://www.liveoakbank.com/2012/11/live-oak-bank-continues-to-evolve-with-new-investment-advisor-financing-vertical/#sthash.FaQOjGlx.dpuf

    The Live Oak team of Investment Advisor industry experts, coupled with their lending industry background, enables them to structure loans designed to meet the unique opportunities facing the Investment Advisor industry. Live Oak is designated as a preferred lender by the Small Business Administration (SBA). This designation allows the bank to make loan decisions at a more efficient and faster pace, leading to quicker access to the necessary funding. Like all of their industry commitments, Live Oak Bank is invested in becoming the leader in financing independent Investment Advisors. – See more at: http://www.liveoakbank.com/2012/11/live-oak-bank-continues-to-evolve-with-new-investment-advisor-financing-vertical/#sthash.FaQOjGlx.dpuf ((In 2012, the response time for an advisor loan was 10 days. Processing took 30 days.))

    *** “Live Oak Bank was founded to provide small business loans to professionals looking to start or expand their business. – See more at: http://www.liveoakbank.com/2012/11/live-oak-bank-continues-to-evolve-with-new-investment-advisor-financing-vertical/#sthash.FaQOjGlx.dpuf” (Live Oak has a limited, “niche industry” bank charter for these purposes and real estate/construction lending.))

    Erwin Cornstuble 1a

    Erwin Cornstuble

    Scottsdale, AZ

    (480) 361-7201



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