Take a look at the six key considerations for advisers looking to sell, stay or appoint a successor to guarantee their business is a success after them.

    Brett Davidson

    What’s your exit plan? Is this something you’re thinking about? I know from my consulting work there are a lot of firms flirting with future issues. There is an older demographic in our industry, but this is going to be an issue for everyone who owns a business.

    Here are the three main options:

    • You can just sell

    But a lot of people don’t want to go down that route because they’re concerned about the culture that exists if they sell to a consolidator or a provider, but equally for most people getting cash for their business is an important part of their own retirement planning.

    • You can stay forever

    Other people I talk to say they’re never going to sell and stay forever, but forever is a long time and there are issues, for example, how long can you stay up-to-date?

    • You can create internal successors who can continue the entity and the culture that you’ve built.

    So, if you’re going to sell the business, what are the main issues you need to think about? You’re trying to make this as strong and valuable, sustainable and as slick and effective as you can.

    Ideally the business will be self-managing and again ideally the thing would run by itself. That means if you go away for a few months, it’s not going to come to a crashing halt, and hopefully also it’s profitable.

    Also ideally if you’re looking to sell, the business is low-risk and predictable. The more predictable the cash flow is, the more money I can give you for that business as a buyer as I have more certainty about the likelihood of servicing the debt. If it’s low risk there’s less chance of something coming left field and messing up that theory I’ve just had in terms of predictability.

    If you’re going to stay forever, what are the issues? I would argue that it is exactly the same set of issues. There’s not really any difference. If you’re looking at internal succession you’re still looking at all of the same stuff.

    I don’t care whether you’re staying, selling or looking for a successor, you should be focused on the same set of issues.

    How do we get your business starting to look good so people will want to buy it from you or so it is profitable and fun if you’re staying?

    This is the hard part: think about what do you have to focus on to deliver that outcome.

    If I’m running a marathon I need to focus on the inputs – I might run three hours for a marathon, but at the end of the day to focus on the result I need to focus on the inputs. When I speak to advice firms and they show me their outputs- they’ve got this much under management, they’ve got this for their turnover. I want to know about the inputs; what happened before to make that happen has a big impact on whether it will get better or worse.

    There are many inputs that we need to focus on to make the business attractive to internal successors, buyers or to sustain.

    These are:

    • People – strong core team
    • Process – amazing and institutionalised client experience
    • Culture and values – the way we do things here
    • Business management – problem solving teamwork and communication
    • Financials – 25% net profit margin after everyone gets paid
    • Client profile – new clients required from rain maker or marketing engine.


    The people thing is huge. At the end of the day ideally everyone in a small team is performing and is good at their role. But you need a strong core team so whatever you’re doing, this will continue.

    In the consulting work I do, 70% of jobs that I go into, someone gets the boot – it sounds awful but it’s not meant to be. It’s because they’re not right. Getting the people right is absolutely critical.


    There are two key processes; engaging with new clients and ongoing servicing.

    Engaging with new clients is a bit of an art. You can have a process and can teach it to someone else, but it’s not the same as there are a lot of variables and lots of things can come up.

    Secondly, how do you do ongoing servicing and reviews and keep a lifetime relationship with clients? If that works, you’re going to be in pretty good shape.

    You want your processes amazing and institutionalised - everyone on the team does things in the same way, and although there’s room for creativity there is also a consistency.

    Culture and values

    This gets talked about a lot and is easy to pay lip-service to but this is at the heart of what you do and is why so many firms are interested in creating internal successors – because this really matters to them.

    Culture is very difficult to touch, see or measure but pretty easy to sense if it’s good or not. Culture stems from you and your values. These are the anchors that determine how this is going to work. Once you get the value and culture right, things like recruitment, retention, client selection, is a walk in the park. When you’re not clear on culture those things can get messy.

    Business management

    When I think of business management, I think of problem solving. Every business has issues – those that solve them go forwards. Those that can’t get to grip with its issues won’t.


    You could argue financials are an outcome of all of these other factors. Although you can control financial performance by controlling costs, budgeting and forecasting.

    Client profile

    Client profile is an issue in the value for business. There is a lot of talk about aging client bases and the key to having a vibrant and healthy business is being able to attract new, good quality clients.

    A lot of firms have a rain maker, which is usually the owner, that brings in new clients. But firms that don’t have a natural rain maker need to come up with a good marketing engine, to generate leads, whether it’s networking with professional connections, content marketing or a range of other things.

    You can do this mental checklist and see what you would give yourself out of 10 and even if you think you are good, there’s always something you can do better.

    If we could get these things working well in your business, and all of this stuff is working, I think you’ve got a decent business, which is definitely saleable.

    The funny part about selling your business, most advisers look to do so when everything’s gone to hell in a hand basket, nothing is quite working; either a key person has left or recruitment problems. When all this stuff is figured out, funnily enough that’s when they think they can do it for a bit longer. So it’s important to get your own headspace right.

    You get these things right, you reduce risk in the business and you increase the certainty and predictability of your cash flow.

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