Selling your independent Financial Adviser (IFA) business is a pivotal decision that requires careful planning and strategic insight. For many business owners, their IFA business represents years of dedication, trust, and success, making the sale not just a financial transaction but also an emotional journey.
Why is it Important to Know How to Sell Your IFA Business?
IFA businesses spend ages building up a company and a brand that’s trusted by many for their financial endeavours. Selling an IFA business is an important and crucial step to a great exit plan and you want to make sure you get it right.
3 Things to Ask Yourself Before You Look to Sell:
What are Your Long-Term Goals and Exit Strategy?
If you’re looking to retire, shift focus to another venture, or simplify your professional life? Understanding your motivation for selling will influence your approach, including whether you want a full exit or a phased transition.
What is The True Value of Your Business?
Have you conducted a professional valuation to understand your business’s worth based on assets under management (AUM), client base quality, Recurring revenue, and compliance history? How do your existing client relationships and retention rates contribute to the valuation, ensuring you maximise the value before sale is essential.
Are You Ready for This Process?
Selling an IFA business can be a complex and time-consuming process, involving due diligence, negotiations, and emotional decision-making. Are you prepared for the commitment it requires? Do you have the necessary legal, financial, and professional support to navigate the sale effectively? Are you emotionally ready to let go of a business you’ve built, including the relationships with clients and staff?
Ways to Sell Your IFA Buisness:
Online Website:
When selling an IFA business most people opt to sell their business through various online websites. These websites offer to advertise your business for free with a ‘no sale, no cost’ approach and charge you upon completion or for a fee. Fees massively vary from website to website and many will apply a ‘one size fits all’ approach.
Specialist IFA Acquisition Broker:
The optimal way to sell your business, in any industry is by seeking a specialist who is well-versed in your sector. The Benefits of Using an IFA Acquisition Broker like IFA Market:
Expert Valuations:
Brokers provide accurate assessments of your business, considering factors like client base, recurring revenue and market conditions, ensuring you receive a fair price.
Market Knowledge:
With deep industry insights, brokers can identify suitable buyers and opportunities, facilitating a smoother transition process.
Time Efficiency:
By managing the entire sales process – from marketing to negotiations – brokers save you significant time and effort, allowing you to focus on your ongoing responsibilities.
Negotiation Skills:
Experienced brokers handle negotiations to secure the best possible terms and conditions, protecting your interests throughout the sale.
Confidentiality and Discretion:
Brokers ensure that sensitive information about your business is handled discreetly, maintaining confidentiality and protecting your reputation during the sales process.
Types of Sales:
Once you have found the method that you want to sell via, the next thing to check is the type of sale you want:
Share Sale
With a share sale, the individual is the buyer of the shares of the business and the acquirer will retain its assets and liabilities. The purchase is between the company’s shareholder(s) and the buyer of the shares. With share purchases, business owners should be able to benefit can undertaking a seamless transition from you to the acquirer as they are buying everything.
Asset Sale
The alternative option is an asset sale which is where an acquirer buys some or all of the assets of a company without assuming any of the prior liability. The seller will retain legal ownership of the business and although the company won’t be training after the sale, they will need to keep it active over the sale period and then they will apply for liquidation.
Key Considerations of Both:
For Sellers:
- What are your priorities – tax efficiency, a clean exit, or flexibility in the sale terms?
- Are you prepared for potential liabilities that may arise post-sale in an asset sale?
For Buyers:
- Do you want to take on the existing liabilities of the business, or prefer a more targeted acquisition of assets?
- How much due diligence are you willing to perform to mitigate risks in a share sale?
Which Option Is Right for You?
The choice between a share sale and an asset sale depends on your business structure, tax planning, and strategic objectives. For smaller IFA businesses, asset sales focusing on client books are common. However, larger firms with more comprehensive operations often prefer share sales for continuity and simplicity.
Conclusion:
Selling an IFA business is a significant milestone that requires more than just financial preparation – it demands clarity, strategy, and the right support. Whether you opt for a share sale or an asset sale or choose to work with a specialist acquisition broker ensuring that the process aligns with your goals is paramount.
