Alan Steel has recently said that there is no need to sell your firm at retirement. I couldn’t agree more.
Last week, a large South West-based firm was reported as having been ‘sold’ for £500,000. Oh, but only £220,000 was hard cash, with the balance being shares/targets. Not bad for a firm that supposedly had pre-tax profits of just shy of £200,000. When I say ‘not bad’ – just in case anyone is not paying attention – I mean not bad for the purchaser.
I have argued for years now that selling up is like buying a very poor annuity.
Having a succession plan for your firm (being Alan’s point) is key, but it is not always that easy; and if you do not have one, then just what do you do? Well getting into bed with someone who will pay you the majority of any ongoing income you have for at least 10 years would be a better alternative than selling up short. Being given carte blanche to continue seeing your clients (in a non-advisory capacity of course) also seems to make sense in my book – you have the relationship with and the trust of your clients so why would that suddenly have to just stop?
There are different ways to exit this profession but the sale-for-cash route always seems to be the one that gets a mention. If you are looking to retire you will soon realise that consolidators can put quite differing propositions on the table.
Ian McIver
Development Director,
Nexus IFA, Bridgwater,
Somerset
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