Understanding Deal Structures for Buying or Selling
Buying or selling a financial advisory practice involves careful consideration of different deal structures, each offering unique benefits for both parties. The outright purchase is often favored for its simplicity, allowing a single payment or structured financing to complete the transfer and establish clear terms for valuation and handover.
Another common structure is the gradual buyout. This allows sellers to retain majority ownership while the buyer gradually takes on more responsibilities over time. This method fosters a smoother transition. On the other hand, internal succession emphasizes mentorship. In this approach, an experienced advisor prepares a junior colleague for eventual ownership through training and building client relationships.
Advisors nearing retirement often use these strategies to secure their legacy and maximize their practice’s value. For those unsure about how to structure a sale, industry specialists can assist with valuations and guide the decision-making process.
Finsum: It’s also very important to get an accurate valuation estimate of your practice regardless of which method you settle on.
- succession planning
- retirement
- advisors
- LPL
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
