With regard to the FA article Regulatory Pressures are Forcing Sole Traders to Bail (9 October), as I have written many times before, selling for a capital sum is a very poor value decision in my opinion. This is especially so if you have a reasonable level of recurring income.
Simple maths will tell you that the amount of capital you need to get anywhere near your recurring income level is going to be a pretty steep order, indeed impossible. The irony is that the ‘capital’ sum is never paid as a lump sum anyway – for obvious reasons to the buyer, it is done on the drip.
Get the attrition rate and you could find yourself with a payment in year one and a bill in year two.
Far better to have a mutual arrangement with someone who will pay you a reasonable percentage of your income so that all parties are happy. Nexus has just taken on its 21st ex-adviser in this manner. We do not make a song and dance about it but I do notice that every time a firm is sold for a capital sum it seems to be an article in itself.
Ian McIver
Development director, Nexus IFA, Bridgwater, Somerset
