OpinionAug 3 2016

Buyers beware – listen to a seller when selling up

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I was amazed recently to hear that some advisers were considering joining a network just so it gave them some sort of ability to exit/retire in the future.

This seems a rather excessive course of action when selling up/retiring/de-authorising (whichever term you prefer) is relatively easy.

Advisers come in various shapes and sizes, but for the majority I come across (one or two adviser firms) there are plenty of buyers in the market.

For a seller, I accept that perhaps the choices then seem complex, but are they really? Just like a client you may have, the question is simply do you need income or capital on sale?

Most consolidators (buyers) purchase for a cash sum. This is fine if you need the capital, but to dispel a myth, you do not need to follow this option if obtaining entrepreneur’s relief is an objective.

Ultimately, and mathematically, selling your business is akin to annuity purchase in reverse. Receiving a proportion of the recurring income you are used to for a lengthy term is expensive. Do the maths. It is going to be considerably more than a typical cash sale for a multiple of recurring income.

Ian McIver

Development Director, Nexus, Bridgwater, Somerset