If you want to sell your financial services practice in the foreseeable future here are six key things to do, starting now.
1. Start early.
Start today.
It will take three to five years to get everything squared away, so start now. Contact a business broker for tips on what to do to prepare your practice to sell. Like a realtor, the business broker will tell you what is needed to "spruce up" your practice, to make it more valuable and saleable.
Don't put the practice on the market until it is ready to sell.
If you put your practice on the market early it will not have the value that it would have if you wait until everything is in order. On the other hand, start now to look for prospective buyers among other financial services practitioners.
Clean up you books and records.
Generally a potential buyer will want free access to your accounting records. A good set of books and records will make it easier for the potential buyer to make a decision, and will also reflect well on you as a business owner.
Don't start new activities that won't produce profit soon.
Activities that don't produce a profit will drag down the price of your practice, eventually making your investment in them a loss.
Get your personal finances in order.
Your practice is only as valuable as the buyer can afford to pay for it. It is quite possible that you will have to finance some of the selling price, taking back an installment note receivable from the buyer. Therefore, you must price it so it is affordable.
Clearly separate distinct lines of business.
For example, if, in addition to your financial services practice, you developed a specialty to administer certain employee benefit plans, clearly separate the two activities and be prepared to sell them separately. If you own your real estate you may want to retain it and rent it to the buyer.
Be prepared for an asset sale.
Buyers who purchase the stock of your corporation will not be able to deduct that cost until they sells the stock. But if they buy your equipment, they will be able to depreciate it. If they buy "goodwill," (the price paid minus the value of the tangible assets purchased) they'll also be to amortize it.
Have a look at your offices, make sure they are presentable and look professional.
Have you upgraded to flat screen monitors, or are you still using those old cathode ray tubes?
2. Develop a stable, loyal staff.
A stable, loyal staff will have a tendency to stay with the practice, making the practice more valuable, smoothing transition, and increasing client retention. You can develop a more loyal staff in many ways:
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Sponsor a qualified retirement plan.
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Provide fringe benefits.
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Provide professional training.
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Consider an educational reimbursement arrangement.
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Develop an incentive compensation package.
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Consider non-compete agreements for key people.
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3. Delegate whatever you can to staff members.
By pushing work down you will develop your staff's professional ability.
More client contact with the staff will make for an easier transition when you retire. It will make your staff more capable of a smooth transition.
