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Buying, Selling, and Valuing Financial Practices The FP Transitions M&A Guide von Grau, David (eBook)

  • Erscheinungsdatum: 15.08.2016
  • Verlag: Wiley
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Buying, Selling, and Valuing Financial Practices

The Authoritative M&A Guide for Financial Advisors Buying, Selling, & Valuing Financial Practices shows you how to complete a sale or acquisition of a financial advisory practice and have both the buyer and seller walk away with the best possible terms. From the first pages of this unique book, buyers and sellers and merger partners will find detailed information that separately addresses each of their needs, issues and concerns. From bestselling author and industry influencer David Grau Sr. JD, this masterful guide takes you from the important basics of valuation to the finer points of deal structuring, due diligence, and legal matters, with a depth of coverage and strategic guidance that puts you in another league when you enter the M&A space. Complete with valuable tools, worksheets, and checklists on a companion website, no other resource enables you to: Master the concepts of value and valuation and take this issue 'off the table' early in the negotiation process Utilize advanced deal structuring techniques including seller and bank financing strategies Understand how to acquire a book, practice or business based on how it was built, and what it is capable of delivering in the years to come Navigate the complexities of this highly-regulated profession to achieve consistently great results whether buying, selling, or merging
Buying, Selling, & Valuing Financial Practices will ensure that you manage your M&A transaction properly and professionally, aided with the most powerful set of tools available anywhere in the industry, all designed to create a transaction where everyone wins-buyer, seller, and clients.


    Format: ePUB
    Kopierschutz: AdobeDRM
    Seitenzahl: 320
    Erscheinungsdatum: 15.08.2016
    Sprache: Englisch
    ISBN: 9781119207382
    Verlag: Wiley
    Größe: 2517 kBytes
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Buying, Selling, and Valuing Financial Practices

Chapter 1
The Basics You Need to Know

Avoiding the Critical Mistakes

There are two critical and common mistakes that independent financial advisors make in the mergers and acquisitions (M&A) space. One is to treat every sale or acquisition target the same way: applying the same valuation approach, the same set of documents, and a common set of payment terms or financing elements, regardless of the size or structure or sophistication of the opportunity. The second mistake is to equate exit planning with succession planning-the two concepts are completely different and advisors must understand the differences if they are to succeed in this arena and correctly structure a transaction, whether as seller or buyer.

The specific purpose of this book is to help advisors understand how to sell what they've built to someone else for maximum value and at optimum tax rates, and/or to successfully complete an acquisition and become someone's exit strategy, on the best possible terms, with minimum risk, writing off the entire purchase price over time. These are not disparate goals; they are connected in every way and part of a win-win-win strategy that must be the ultimate goal for the buyer and seller, the good of this industry, and the client base that serves as judge and jury over the outcome of the M&A process.

For most independent financial advisors, their book or practice or business is easily the largest and most valuable asset they own. Critical mistakes cannot be allowed to happen. The process of sorting out the issues, learning the basics, and then mastering the more complicated aspects starts right here, right now.

Exit planning results in a transaction with either an external buyer or an internal buyer, but the commonality is that the process is completed in one step-usually not suddenly, just completely. External buyers usually have a very similar practice model but are often much larger than the seller in terms of size and value, while an internal buyer is someone you've hired, know, and trust (maybe even a son or daughter), but who is often without the financial resources and the experience of the external buyer.

A succession plan is quite different; it is designed to build on top of an existing practice or business and to gradually and seamlessly transition ownership and leadership internally to the next generation of advisors. The founding owner in a succession plan is not a "seller"-they're a business partner or a shareholder, and long-term, sustainable growth powered by multiple generations of collaborative ownership is the number one goal. This book is not about succession planning. If that topic is of interest to you, please consider reading our first book, Succession Planning for Financial Advisors: Building an Enduring Business.

As part of exploring the various exit strategy options and how to structure those transactions, this book will also explain the different value and valuation techniques and their applicability given various situations. You'll learn the difference between an asset-based deal structure and a stock-based deal structure, as well as how to employ various financing methods such as a promissory note, performance-based or adjustable notes, revenue-splitting or revenue-sharing arrangements, and earn-outs. The element of bank financing will also be carefully considered because this is a powerful tool when used correctly. We'll also evolve beyond the basic concept of silos versus ensembles in the process toward a more sophisticated and accurate classification system.

One of the fundamental tenets of this book is to not treat all advisors the same as though one approach to valuation, contracts, payment terms, and contingencies fits all situations, sizes, and revenue models across the spectrum. In fact, there is no one single method, one single view of this unique industry

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