Every business owner, including financial advisors, gets to a point in their business cycle where they have to decide if they want to keep their company or sell it. For some, that might feel like more of an emotional decision; for others it may be a purely economic one. So how can you know that you’re making the right decision for the right reasons? As a leading M&A advisor with over 15 years of success in the RIA space, we have unique insights into the decision-making process of selling an advisory firm.

Factors to consider

There are several aspects that need to be considered. One of them is what your business is worth – and that means both how much it could be acquired for and how much it is personally worth to you. Taking the first of those points, will your company fetch what you financially need it to? And if it does, is there anyone willing to purchase it?

As the inaugural Gladstone Prognosticator, the industry’s premier forward-looking mergers and acquisition research study showed, firms with less than $100 million in assets under management (AUM) are least desirable for acquisitions in the next year, while the sweet spot is firms between $500 million and $1 billion in AUM. Information like this can fuel your decision on whether now is the time to sell or whether it makes more sense to hold onto your business or partner with an investor who can help rev up your growth engine and share the success together.

Acknowledging the complexity and difficulty

The keep/sell decision is a multi-faceted and difficult decision to make. You must acknowledge this at the outset and throughout the process to give your decision-making process the respect it deserves. The aforementioned are only two of many factors you need to reconcile before making this important decision. As this is a decision that you cannot really take back, it is vital to collect all the necessary information and consider the various perspectives.

The wealth management business is experiencing a convergence fueled by succession planning, growth challenges and monetization opportunities. Understanding these trends can provide valuable context for your decision.

Leveraging trusted resources

Navigating the M&A process or considering a transition can be a complex and labor-intensive endeavor, especially for closely held businesses. The sheer amount of work involved can be surprising and challenging, and extremely distracting. Whether you're actively seeking a buyer, evaluating potential suitors, or simply curious - it's crucial to have expert guidance throughout the process.

Just as you provide valuable financial planning and investment advice to your clients, consider seeking the assistance of professionals who specialize in advisory firm transitions and M&A. These experts can help you break down costs, polish up your financial presentation, present your business in a marketable way, and guide your decision-making process. They know who the legitimate buyers are and can check your important boxes to save you valuable time.

Remember to remain curious, ask questions, and be open to all possibilities. Whether you ultimately decide to stay independent or be acquired, having a knowledgeable advisor by your side can help you narrow your focus and make more informed decisions. This support can be invaluable in achieving the best possible outcome for your firm's future.

– Dan Kreuter is Founder and CEO of Gladstone Group, a national firm specializing in M&A Advisory, Strategic Growth Consulting, Valuation, and Executive Search