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Reimagining Retirement | Episode 3

Here’s What You Really Need to Know:

More than 180 financial advisor firms were acquired in the past 10 years. Even with the down market, acquisitions continue at a rapid pace. With this ever-changing landscape, what does the future hold for financial advisors?

Bonnie Treichel, founder, and Chief Solutions Officer, of Endeavor Retirement, and other industry experts provided answers during this edition of Reimagining Retirement. Panelists joining Bonnie included:

Matthew Eickman, J.D., AIF®, national retirement practice leader, Qualified Plan Advisors
Rob Madore, Director, Wise Rhino Group
Director, Wise Rhino Group Bonnie Paige, Privacy and M&A Attorney, Clementine Legal.

When considering the sale of a practice, these experts noted it can be hard for sellers to determine the true value of their companies, and revenue is only part of the formula. Profitability and growth potential are also key factors in calculating value. M&A consultants such as Wise Rhino Group can be especially helpful in determining a company’s value.

How to Prepare for M&A

The panelists provided key insights for both buyers and sellers in these transactions to ensure an acquisition or merger is a success for both parties.

They recommended buyers:

  • Assess whether the company’s culture and interests align with theirs
  • Evaluate how well the company will integrate with their own
  • Determine the business’s scalability
  • Identify key employees
    The panelists noted, however, that not all buyers are looking for the same thing in a transaction, as there are different types of acquirers in the marketplace. The experts said sellers should:
    • Run a sound, competitive process
    • Understand their own value
    • Create a story to illustrate the company’s value
    • Outline key assets
    • Determine negotiable terms
    • Work with a consultant to create a term sheet and know when to bring in legal counsel

    Also consider the importance of key terms and provisions such as:

    • An “earnout” provision for contingent additional payments
    • “Holdback” provisions to ensure certain outstanding contractual obligations met

    Additional Considerations:

    When funded by private equity:

    Private equity firms fund many acquirers today. The panelists said when private equity is involved, sellers should ask these questions:

    • Why did the acquiring company choose their partner?
    • How is the firm managed?
    • Is the firm providing only funding or also strategy?
    • How does the buyer talk about its partner?
    • What is the acquirer’s future direction?

    As the webinar wrapped up, each panelist provided a final piece of advice:

    Eickman: “View the M&A process as a relationship rather than a transaction.” Madore: “Realize you’ve built something valuable. Know what it’s worth.” Paige: “Time kills all deals. Move fast. Don’t give someone a reason to stop the deal.”

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