The process of positioning an independent RIA for sale can feel daunting for an independent financial advisor. Ensuring that the firm is appealing to buyers while maintaining its integrity requires thoughtful preparation and strategic action.
Here are three best practices to help position an RIA firm for a successful acquisition.
1. Focus on the Firm’s Strengths
The good news is that you’ve spent countless hours providing top-tier financial advice, making the firm inherently attractive to sellers. It may feel tempting to compare yourself to other firms within the space, but highlighting the strengths of your firm, whether it’s exceptional client relationships, a niche market focus or a solid fee structure, will resonate with buyers.
To do this effectively, you need to deeply understand your business. Think of it as preparing for an episode of “Shark Tank.” Be ready to articulate your financials, explain your client base, outline employee roles and identify growth drivers. This demonstrates that you’re leading a well-run, desirable business. It is equally important to recognize what sets your firm apart.
Every firm operates differently, shaped by its approach to client service, internal processes and delivering value. By clearly defining and showcasing these differentiators, you’ll position your firm as a standout in a crowded marketplace. Buyers value authenticity and a clear identity, so lean into what makes your firm special, instead of reacting to industry trends or emulating competitors.
2. Run Your Business at Full Speed
A common mistake that sellers make is attempting to optimize their firm’s appearance for buyers by making sweeping changes or halting normal operations. This approach can backfire, because buyers scrutinize a firm’s historical performance. Drastic actions like firing key staff to cut expenses or delaying necessary hires can raise red flags, causing buyers to question the firm’s stability and continuity.
Instead, it’s best to keep running your business as you always have, maintaining focus on client service and business growth. While it’s fine to consider adjustments like revisiting a fee schedule or trimming unnecessary expenses, these changes should reflect a long-term vision rather than a short-term tactic to increase sale value.
