Advice succession planning to become harder
The growing pool of potential buyers for advice practices coupled with an undersupply of available practices was leading buyers to make the wrong purchase.
Such is the opinion of Connect Financial Services Brokers chief executive, Paul Tynan, who said many buyers looking for advice practices were 40-50 years old, who needed to ‘buy a job'.
Buyers wanted to either make strategic acquisitions, diversify, or they were individuals who wanted to become self-employed.
"They have been downsized or don't like the new institutional world, have been transferred out of an area or have decided they want to be their own boss in charge of their future professional/career destiny," Tynan said.
The retirement plans of baby boomer advisers were being thrown into disarray due to ill health, bankruptcy, death, divorce, legislation and the business environment
"Prospective buyers of practices need to be patient and not be ‘spooked' into making inappropriate acquisitions that have the potential to be long-term catastrophic financial decisions," Tynan said.
He added that with international trade barriers being broken down and outsourcing becoming the norm in business, succession planning has never been harder.
"A seller will never get the perfect business environment to execute their retirement and exit plans. In fact, if you are waiting for the economy to move into growth mode, or for the government to pass the FoFA legislation, forget it."
Sellers planning an exit should factor in their business, health, finance and lifestyle, as well as current market conditions when making their valuation expectations.
"Ultimately, for both buyers and sellers the only constant is change — and growing older," Tynan said.
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