2023 Mid-Year Update on Advisor M&A and Financing
Advisor M&A activity skyrocketed over recent years, reaching unprecedented levels prior to and during the pandemic. Despite uncertainty in the markets, advisor M&A transactions continue at an elevated rate compared to the last decade, though slower than the last three years. One of the most notable trends we are seeing is the shift in the…
What the Advisor M&A Data Leaves Out
Reports are constantly released providing updates about the state of M&A activity in the financial advisory industry. As impressive as this data may seem, it is far from a comprehensive and accurate view of the total number and types of deals occurring each year. This is because much of the data that is provided comes…
Advisor Roles – Creating a Balanced Team
The role of a financial advisor can be diverse, especially as their team and practice grow. The industry attracts many types of people, and each will naturally gravitate toward different aspects of the financial advisory profession. Practice leaders can leverage these natural tendencies to build a balanced team where advisors can use their predilections and…
Tips for Recruiting Nextgen Talent
M&A continues to dominate the headlines, but the desire to transition a financial advisory practice internally has become much more common. Therefore, the continuity of any financial advisory practice rests largely on the founder’s ability to find and develop a qualified successor(s). Finding new blood can be difficult, especially as many industries are feeling the…
Driving Growth During A Recession
The financial advisory industry has experienced tremendous growth over the last several years. As recession fears loom, advisors are looking for ways to continue that growth trend. Although recessions come with many challenges, they also present many opportunities to drive both organic and inorganic growth. In fact, advisors who continue to make strategic growth decisions…
Impact of a Recession and Higher Interest Rates on Advisor M&A
Both practice values and advisor M&A activity have reached historic highs in the past few years. These rising trends were fueled by access to capital and an increase in education around equity management and M&A best practices. The disruption of the pandemic did little to impact this upward trend. Now, a sharp increase in interest…
Positioning Yourself as an Internal Successor
In some cases, a founding advisor has actively recruited a junior advisor for the purpose of cultivating a successor. Even still, they may not feel that an advisor is ready to graduate to the level of partner, or they may have concerns about the risks involved with taking on a partner. No matter your role…
Financing Organic Growth
Mergers and acquisitions have dominated the conversations around growth in the financial advisor industry. Although a valuable and important growth strategy, smart advisors know that sustainable growth is achieved by investing in both organic and inorganic growth strategies. Whether it’s through enhanced marketing, hiring a Business Development professional, or through COI relationships, organic growth requires…
Refinancing Debt to Improve Cash Flow Ahead of a Recession
A steady increase in inflation coupled with slowing demand has many economists predicting a recession on the horizon. Fear of what challenges a recession might bring has many business owners, including financial advisors, looking at ways to strengthen their financial position to better weather any economic turmoil. While reducing expenses is one way to ease…
Getting The Most Out Of A Nextgen Advisor
Attracting Nextgen talent has become a major talking point across the industry. Much of the focus has been on the need for diversity and for creating a ready pool of successors for the growing number of advisors nearing retirement age. One overlooked aspect of the conversation is the fact that often senior advisors and practices…
Promoting Practice Ownership Among Female Advisors
A significant transfer of wealth is expected to take place over the next several years. During this time, women will inherit a significant volume of assets. Additionally, an even greater number of women are remaining single or are assuming the role as breadwinner for their families. This shift in demographics among financial clients is driving…
What Is Keeping Nextgen Advisors From Pursuing Practice Ownership?
As the financial advisor industry faces a leadership cliff and talent shortage, there has become a greater need for advisors to actively recruit and retain Nextgen talent, not only to support the ongoinggrowth of the firm, but to create a bench of qualified successors. Despite efforts to fill the ranks with worthy successors, many Nextgen…
With Interest Rates On The Rise Now Is The Time to Refinance Your Financial Advisor Loan
There are many reasons to refinance an existing loan. Chief among them is the need to secure a lower interest rate. Lower interest rates often mean lower payments, which can positively impact cash flow. This is especially true when inflation and other market factors are expected to make the costs of labor, materials, and other…
The Biggest Things That Surprise Advisors About Advisor Loans
As an active participant in the financial advisor industry, our team engages in conversations with advisors from across the spectrum. From RIAs to IBDs, and advisors from all walks of life, we receive thousands of questions about how advisors can secure capital and what loan options are best for them. Through those conversations our team…
Comparing Private Equity to Traditional Debt for Financial Advisory Practices
As the advisor industry has matured and grown, it has garnered interest from a number of sectors looking to tap into the opportunities that are available. Most recently private equity investors who normally pursue investment opportunities in firms like technology startups and manufacturing have turned their sights to the financial advisor industry. This has provided…
Retain Talent During The Great Resignation By Creating A Path To Ownership
A major shift has occurred, giving rise to what’s being called “the Great Resignation.” Financial advisory practices have managed to stay ahead of this startling trend, which has many business owners scrambling to fill vacancies and keep their business running on a skeleton crew. As other sectors of the economy rapidly increase compensation and benefits…
Is the Advisor Age Wave Coming in 2022?
Mergers and acquisitions activity in the financial advisory space has steadily increased over the past five years. Much of that activity has been fueled by an increase in access to capital, sophistication in business acumen among practice owners, and media coverage of M&A deals. These conditions have created a surplus of buyers in that space…
Making M&A Part of Your Growth Strategy for 2022
For many advisors, the end of the year is a time to focus on setting goals and defining your strategy for the coming year. There are many priorities for a practice, and many options for growing an advisory practice. Often advisors focus on organic client acquisition, driving referrals, and expanding service offerings as methods for…
Tax Implications of Buying a Practice
An acquisition can significantly change your practice in many ways, not just in size. It can bring on new team members, expand your practice into a new region, or even into a new client market. Smart advisors anticipate these changes and plan accordingly. But one change many advisors miss and are often surprised by is…
Getting an Advisory Loan Across The Finish Line
When seeking capital, either for an acquisition or other need, timing is everything. Often a seller will put a deadline on the deal, or you may need to time an equity purchase to the departure of a founding partner. In either case, ensuring a loan meets your timeline requires a collaborative relationship between all parties…
How To Approach A Lender About An Advisory Loan
Often, the activities and opportunities that can drive a financial advisory practice forward require capital. Luckily many specialty lenders have entered the financial advisor market, providing advisors with much needed access to capital. To make the most of these new lending partners, we’ve outlined a few tips on how to approach a lender about an…
Why Selling Advisors Should Be Flexible About Their Ideal Buyer and Deal
Over the past several years, the advisory M&A market has boomed, providing selling advisors with more options and opportunity than ever. Even with more players entering the field and more buyers having access to capital than ever before, selling advisors should remain flexible about what they’re looking for and willing to accept in an ideal…
A Lender’s View on Succession Planning
The investment advisory industry is dealing with an aging advisor force with an average age above 65. This reality has brought succession planning to the forefront of many discussions. Advisors are constantly reminded of the need to put their own succession plan in place,yet less than 18% have a written succession plan. There are many…
The Affordability of Phased Successions
Internal successions have become more popular in recent years. They provide the Founders and Senior Partners with many advantages, including a smoother transition into retirement and the chance to groom their successors in a way that preserves their legacy. In previous years, it was more common to see a single succession eventwhere the seller who…
Leveling the Playing Field for Advisors
For any industry, there are barriers to entry to not only get started, but to also grow a business. In the financial advisory industry, one major barrier to entry and to growth has long been access to capital. Traditional lenders rely on tangible collateral to secure loans and the value of financial advisory practices offers…
The Most Overlooked Segment of the Advisor M&A Market
Large mergers and acquisitions dominate the industry news, leading many to believe that the bulk of transactions occur only at the top level. It also leads many to conclude that a mass consolidation is taking place and could be nearing its peak. Therefore, M&A activity cannot continue to accelerate year-over-year at its current pace. The…
Access To Capital is One Factor Driving Up Practice Values
In the last couple of years, the overall value of a financial advisory practice has increased. According to Todd Doherty, M&A Consultant for Advisor Legacy, there are a number of factors contributing to the rise in practice values, one of which is an increase in lending in the financial advisory space. “Interest rates are incredibly…
3 Biggest Mistakes Advisors Make When Seeking An Acquisition Loan
It takes a great deal of planning and thought to do an acquisition and to do it well. There are many steps and many opportunities to make critical errors that can impact the deal. One area where many advisors make mistakes is in securing financing for their acquisition. Financing options for acquisitions have improved tremendously…
3 Reasons to Refinance Your Acquisition Loan Now
Financial advisory firms looking to grow may find themselves cash strapped after an acquisition, especially if they utilized a high interest loan or a short-term seller note to finance the deal. While the primary purpose of refinancing is typically to secure a lower interest, there are a number of other reasons to consider refinancing. Consolidate…
Five Keys to Getting More Deals Completed in 2021
As an active lender in the financial advisor space, we are always looking to leverage the expertise and insights of some of our key M&A partners. In this post, David Grau, CEO and Founder of Succession Resource Group has provided us with some key strategies and considerations for advisors looking to leverage acquisitions as a…
Three Things Advisors Should Consider Before Buying A Financial Advisory Practice
A practice acquisition can be both an exciting and daunting experience for the first-time buyer. As with any major transaction, it’s important to do your homework and to take the time to learn the process, potential challenges, and what you need to have in place to make a successful transition. To aide in that process,…
Buyer Protections During An Acquisition
Acquisitions are an excellent way to scale your financial practice and achieve rapid growth. As with any purchase, there is always the danger that something will go wrong. It’s good to hope for the best, but smart advisors know to also build certain protections into the deal in order to preserve their investment and maintain…
One Thing You Should Do Before Structuring An Acquisition Deal
It’s always a good idea to do your homework before making a big purchase or entering into an agreement. It’s especially true when buying another financial advisory practice. Financing options for advisor acquisitions have improved significantly over the last several years. However, financing can also be an issue if you don’t take the right steps…
How Personality Impacts Acquisitions
Competition for acquisition opportunities has remained stiff in the financial advisor space for several years. With multiple advisors vying for the same opportunities, sellers are able to look beyond the bid in order to select a truly “right fit” advisor for their succession. As a result, personality and “likability” continue to be the most important…
A Great Source For Acquisitions
M&A activity in the financial advisor market has steadily increased over the last few years and understandably so. Acquisitions are an excellent way to quickly grow a practice. However, the supply of available practices for sale has not kept pace with demand creating stiff competition for practices among buyers. Many would be buyers concentrate their…
The Importance Of Not Doing An Acquisition Alone
Many advisors are eager to grow through acquisitions. For those pursuing their first or even second acquisition, there are many blind spots that can create problems for advisors. Even if the issues don’t manifest right away, something an advisor doesn’t know to look for can show up later on and become a major financial and…
Risks and Protections to Financing Partner Buy-Ins and Phased Successions
The financial advisor industry is rapidly growing. In tandem with that growth is a largely aging advisor force who must now look to next generation leaders to help carry the practice into the future. For many, an internal succession plan must rely on third-party financing so that junior advisors can bring the necessary capital to…
An Overlooked Avenue of Growth For Financial Advisors
When it comes to growing a financial advisory firm, growth strategies usually land into two camps: organic and inorganic growth. Organic growth generally involves client prospecting and business development efforts while inorganic growth focuses on mergers and acquisitions. Between these two paths lies another overlooked avenue for growth for financial advisors – next generation leaders…
Should You Choose Conventional or SBA for Financial Advisor Loans
As mentioned in a previous post, financial advisors now have options when it comes to financing growth for their firm. Lenders have increasingly become more aware of the market and are developing loan solutions to match the needs of financial advisors. Those loan products typically fall into one of two buckets: conventional loans or SBA…
Options for Financing a Financial Advisor Acquisition
The acquisition landscape has changed tremendously for financial advisors over the last decade. As a relatively young and unique industry for traditional lenders, early acquisitions were provided with very few options in terms of financing and deal structure. These limitations created barriers not present in other industries. But as the industry has matured, advisors have…
The Importance Of Shopping Around For Your Next Financial Advisor Loan
When it comes to major financial decisions, most advisors recognize the importance of surveying the market for all options and evaluating them to find the one that best fits your needs. However, we have seen many advisors secure a loan offer from a single lender and assume that what is true of one lender is…
Should Advisors Get Financing Through Their Broker Dealer?
The relationship between an advisor and their broker dealer is a positive and mutually beneficial partnership. Broker dealers actively build resources and tools to help their advisors grow and it makes sense for advisors to leverage those resources—most of the time. Recently Wealth Management published an article advocating for financing an acquisition through your broker-dealer.…
How the Value of a Financial Advisor Practice is Determined
There are many different methods advisors use to determine the value of their practice. Industry averages and rules of thumb may be useful for internal purposes. However, they often fall short of telling you exactly what your practice is worth and what influences that value. A formal valuation can give you an accurate picture of…
Options for Structuring Advisor Acquisitions During the Coronavirus Market Dip
Fluctuating markets spurred by Covid fears have left many advisor acquisitions and internal successions in limbo. Challenging times call for ingenuity and a balanced approach to structuring deals that take into account the impact of the market on both the buyer’s and seller’s position. Although deals may look a little different right now, advisors still…
How the Coronavirus Crisis will Impact Access to Credit for Financial Advisors
Over the past few months, the Coronavirus has made a significant impact on many industries, and especially financial markets. This in turn, has impacted both the earnings of financial advisors and the values of their businesses. We can’t say for sure how markets will act over the coming months, but we do expect to see…