Lawrence Cook, director of marketing and business development at Thesis Asset Management, explains: “Many firms we speak to who are selling are concerned about the culture of the new firm. ‘Will they look after my clients?’
“Advisers will have spent many years advising clients and sometimes more than one generation of the same family.
“Once they have sold their business they are still living in their local community and want to know they have handed over client care to a firm that has a similar ethos.”
Indeed, as Mark Stokes, proposition and marketing director for Succession, and formerly the managing director of Chambers Group, says: "The price is not as important as the proposition and infrastructure."
So price is not the be-all and end-all.
Don’t undervalue your firm
On the other hand, some advisers underestimate the worth or value of their firm, perhaps because they wish to make a quick sale, they are underappreciating the inherent value and the goodwill attached to their business.
Barry Neilson, business development manager for Nucleus, stresses: “It is vitally important that the seller assesses their own financial position before engaging in any activity that relates to their exit.”
He says any adviser wishing to sell “must understand the minimum sum they need to achieve the same financial independence they have been helping their clients realise over the years.
“Many adviser owners seem to be willing to consider compromising on price to secure an exit that offers the highest level of continuity for clients and staff.”
But getting the very highest possible price could become harder to achieve in the future.
John Joe McGinley, founder of Glassagh Consulting, comments: “The elephant in the room is the FCA musings on trail in the Asset Management Market Study.
“While this looked at the asset management sector, advisers must be aware it will have major implications for their profession, particularly when it comes to remuneration – an attractive element of the embedded value of a business.
“This could have a big impact on adviser sale values.”
So why sell?
According to Mr McGinley, the top reason for selling is “the exit strategy as advisers reach an age at which they wish to retire”.
Mr Blunt adds: “The main reason seems to be a lack of succession planning from an aging population of IFAs.”
James Dingwall, chief executive of Thistle Initiatives, says: "Top reasons for selling are the same as always: you have more or less hit your peak, someone is giving you a good value and it is the right time in your life."
But there is also regulation. Mr Dingwall comments: "Regulation is getting harder for small firms and the larger consolidators have spent significant amounts of money on compliance, so they are generally in a good place to cope with regulatory change."