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.
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.
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.
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.
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.
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.
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.
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.
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.