Your 10-year exit: Year-by-year guide to building a "sellable" advice business

Preparing to move on from your financial planning business starts the day you open your doors, according to one expert. He has some advice to help you plan your transition to retirement.

Earlier this year, a Melbourne-based principal of a financial planning firm exited his business after years of searching for the right buyer. 

“I’d been working with that gentleman for 8 years and although I introduced him to a few potential buyers, it never quite landed,” says Paul Tynan, an expert in financial planning succession and valuation and CEO of Connect Financial Service Brokers. 

“It took 8 years for it to click – when he retired, he was 75.”

While Tynan believes financial advisers should be thinking about their end goal from day one, he offers this 10-year strategy to get on the inside track:

Year 1: Evaluation

Review your business with a view to gaining a realistic and attainable valuation; you might want to consult with a professional valuation expert to determine a fair market price. 

Year 2: Foundations 

Create a strategy to strengthen client relationships now and in the future, as satisfied clients are your most valuable assets during the sale process.

Year 3: Operations

It’s always a good time to identify and eliminate inefficiencies in your operations, but when you’re gearing up to sell – whether in 1 year or 10 years – a leaner profit and loss makes your firm more attractive to potential buyers.

Year 4: Finances

Hand-in-hand with operational efficiencies is seeking out ways to maximise profits. Concentrate on increasing profitability by minimising expenses and boosting revenue streams, perhaps by leveraging partnerships and referrals with complementary businesses, such as mortgage brokers or accountants. 

Year 5: Plan your transition

Become crystal clear on your ideal buyer and outcome, whether that’s selling within your dealer network, adhering to a buy of last resort policy or a whole different strategy, Tynan says.

Year 6: Streamline documentation

It’s important that you can demonstrate a number of years of profitable trading, rather than just the last 12 months to 2 years, in order to get the best possible price when selling. Maintaining meticulous financial records (and having them audited if necessary) is crucial. 

Year 7: Get compliant

“You should have clear systems, documented processes and a very high compliance culture,” Tynan says. “That’s a given.” Potential buyers will want to look ahead to what may be coming up regarding applicable laws and regulations, so any steps you’ve taken to future proof your business will set you in good stead. 

Year 8: Commence soft marketing 

Three years from your ideal selling date is the time to create a marketing plan – not to attract new clients, but to promote your business to potential buyers. Utilise industry networks, brokers and online platforms to quietly get the word out that you’re on the market.

Year 9: Consider your terms 

Before you engage in negotiations with potential buyers, get clear on your non-negotiable terms of the sale around price, payment structure and transition details. This will make it so much easier to negotiate when a suitable buyer is found, and can assist in a smooth handover of client relationships to the new owner or team.

Year 10: Sell and celebrate! 

Signing on the dotted line is a step away from your former life and into a whole new adventure! Then, celebrate the new chapter, Tynan says. 

“My advice is to get a champion,” he adds. “Get someone who is a specialist in this area who you trust and who you have faith in to help you through the process.”