Planning Practices Sales Up
Consulting firm, Radar Results is seeing more sellers of financial practices come to market, particularly larger sized firms. John Birt, Managing Director for Radar Results said “Currently our clients are looking at purchasing 10 planning practices which should sell for at least $5 million. We have found 5 of these practices since December 2009. ” Mr Birt goes on to say “Owners of Dealerships are also looking to exit the planning industry due to their profits being lower, often into the red. At the moment we have a number of dealerships wanting to talk to our clients about selling.”
The trend for using a consultant or buyer’s advocate commenced in 2005 with Radar Results pioneering the way. Since then a number of buyer advocates have sprung up, all doing very well. Mr Birt believes competition is healthy and often the advocacy firms refer to each other when it’s in the interest of helping a client.
On the flip side, using a broker to sell your business can be a very expensive and unrewarding exercise. Often their process can cause the sale to be delayed; sometimes well over a year expires with no result, not to mention the 5-10% commission you have to pay.
A good buyer’s advocate will allow their client to meet a suitably matched seller and have the whole deal completed in 1 to 2 months. It’s a private consulting experience that’s offered by Radar to the financial planning industry, rather than a broker flogging a business to all and sundry. A dangerous aspect of this “sell to anyone” mentality is that the staff will find out that you’re selling – since its broadcast everywhere! You then have quality staff leaving to find a safer employer which can affect the sale price. Another downside is the time wasted being introduced to buyers that are not a cultural fit, or matched to your business model.
Radar feels that offering a business to hundreds and thousands of people doesn’t respect the seller or the seller’s clients. It can take you 20 years to build a good client base and many of them (the clients) become friends. Selling them at an auction is like “selling meat carcasses to a butcher”. It’s usually not what planners had in mind when they took that first step towards retirement.
Radar Results is running a series of Workshops in May and June to address these issues. Workshops are being held in Melbourne and Sydney shortly. Contact Radar’s Operations Manager, Michele Conroy on michele@radarresults.com.au for an invitation.
