When it comes to growing your business, advisers tend to concentrate on organic methods, such as garnering referrals and introductions to new clients and gaining more assets from existing clients. But as business valuations approach historic highs and more advisers approach retirement, it has become a seller’s market. And the uptick in advisers thinking of selling their businesses has prompted younger advisers to change their growth strategy to focus on mergers and acquisitions.
Many firms, including Commonwealth, offer in-house valuation services that can give advisers a ballpark idea of what their firm or practice might be worth. This is helpful to sellers and vital to those advisers who need capital to finance an acquisition. Additionally, we’re seeing exciting developments in terms of partner firms offering loans and equity options that can help advisers with the capital they need to realize their business growth goals. Moreover, for advisers thinking about succession, the combination of financing and valuation guidance can help ensure a smooth transition.
With many popular loan options, advisers at wirehouse firms may find it hard to benefit from many of the loan and financing options available. Since they don’t own their cash flows (technically, the firm does), it can be difficult to borrow money. The exception is for breakaways — there are loans available to help wirehouse advisers pay back forgivable loans when leaving a firm.
For independent advisers, RIAs, and hybrids, there are a variety of financing options for evolving your business.
For advisers looking to raise additional funds to grow, evolve, acquire, or transition their businesses, financing options offer both cash infusions as well as flexibility and could be a great assist to their long-term business plans. It’s critical that advisers have the freedom to pursue their vision and plans for the future while continuing to run their businesses the way they want.
Kristine McManus serves as chief advisor growth officer at Commonwealth Financial Network.
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