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From Adviser Guide:

Q: What are the different sale options?

A two-year buy-out plan.means you can, if you should wish, completely exit the business when this is completed or continue to manage the individual firm after that time has elapsed.

By Emma Ann Hughes | Published Nov 29, 2011 | comments

According to David Hesketh, group mergers and acquisition manager of Perspective Financial Group Ltd, the ‘exit without an exit’ option requires much more of the firm, its financials and the way it operates, than other routes.

For a start, Mr Hesketh said the firm has to be an attractive potential purchase for another firm or consolidator and this means it will need to jump through some considerable hoops.

2) Sell the firm immediately.

For those who want to sell up immediately this option can be more tricky if the firm is not as profitable as a potential purchaser might like, or in other cases, is perhaps not as ‘new model’ as it could be.

Mr Hesketh said in his experience, very few owners want to opt for this short, sharp, shock exit method; they will much prefer to work with a purchaser (whoever they might be) to ensure that the transition is smooth, and in many cases, that they retain a role with the business going forward.

He said: “Very few want the firm they have built up to go out of existence, instead they are looking for a partnership approach that provides them with all the expertise and support they need to take the practice forward, but also offers them access to its value now and the reassurance to see the brand, employees, and clients all taken care of now and into the future.”

3) Selling a client bank.

Selling the client bank appeals to some practice owners as it appears to be a quick and effective way to make that exit.

However, Mr Hesketh said it is not always as simple as it seems and it is certainly the case that the return achievable from this method of ‘selling up’ is going to be considerably less than that which might have been derived from selling the whole firm as a going concern.

He said: “With such a sale, there will be no ongoing income for the vendor which may well put them off from choosing this option.

“There are many issues to consider not least the consideration of those who work at the practice – will they be kept on by the practice that purchases the client bank? Plus, how will clients react?

“Also, what happens to the clients post-sale – many owners will have spent the best part of their working life establishing such a bank and they will undoubtedly want to be comfortable that service standards are maintained post-sale.

“This can effectively rule out many prospective purchasers.”

4) Attempting to integrate the practice into a local competitor.

Integration costs time, money and resource, plus your business may not be particularly attractive to a competitor especially if you are already aware you are on your way out of the game and they could just wait for the business equivalent of natural selection to take its course.

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