There are an increasing number of sales and acquisitions in Australia’s financial planning industry. This has generated interest from several sources which hope to capitalise on bringing buyers and sellers together. With more practices up for potential sale in the future, active buyers need to be aware of deal sources and the relative merits of each.
1. Your network. Colleagues, your dealer group, BDMs and PDMs and other people you come into contact with regularly who are active in the market are all well placed to advise you on opportunities. The more people you talk to, the more likely you are to come across interesting opportunities. Ensure your network is aware that you’re looking to buy and enlist their help in finding potential sellers.
2. Your strategic alliance partners. It could very well be possible that one of your strategic alliance partners would be aware of planners interested in selling some or all of their practice. For example, life insurance brokers you may work with, solicitors and accounting practices would fall into this category.
3. Professional intermediaries and business brokers. A growing trend is in the use of independent, external professionals to locate potential sellers. A buyer engages the services of a professional who identifies the buyer’s geographic target and desired characteristics. The intermediary then acts as the buyer’s agent to contact the firms directly.
This approach can be very effective, and is more discreet than a direct approach. The intermediary generally charges a fee contingent on a successful acquisition. In addition, intermediaries can offer additional consulting services to the buyer. The services may include valuation, deal documentation and negotiation. The intermediary should be the buyer’s advocate, acting in your best interests.
4. Other sources. A good adviser knows their competition. Is there an older adviser nearby who has no obvious successor? Is there a smaller firm who might be interested in a larger platform? Industry conferences and forums increasingly feature sessions on transition, valuation and succession. Network at these functions and make it known you are an interested buyer.
Identifying suitable acquisition targets in today’s competitive market can be challenging, and there may be some avenues you haven’t considered to source potential prospects. To make sure you get the best result, enlist all potential lead sources to help you find the right firm.
