Financial Planning Practice Sales - an Orderly Flow or a Flood?

Accountants may be about to see the glass ceiling on practice valuations broken through as several long-held assumptions are being challenged in the post-Covid marketplace.

The sun is fast setting on the old way of business brokering. The privileged position of a business broker as a gatekeeper to information and connection is under threat in a world where clients can now find each other via searches on smartphones, and that means the most fundamental adage of business survival applies: adapt, or die.

The Private Broker Network™ (PBN) is a members-only walled garden marketplace for business brokering and succession transactions. It is intended to be used by large networks of member businesses such as financial planning dealer groups and franchises.

Being invested in the fate of your practice after you have left your role is important. You can bet that the buyer will consider it so - one of the greatest concerns to a buyer is whether the practice they are purchasing will maintain its turnover after the key practitioner exits.

Whether you are a vendor or buyer you will have a vested interest in ensuring you maximise the value of your transaction when it comes to handling client retention.

With cost of housing up and uncertainty all around it's not surprising that professionals seeking partnerships might hesitate at taking on more debt for an equity purchase. But some practices are solving the issue by offering a different take on the traditional partner package.

The combination of FOFA / RC fallout, Covid-19 and a tightening of credit availability is shifting the financial planning practice market in the direction of buyers. This has ramifications if you are thinking of selling - but it's not the whole story. As always, context is critical.

Covid-19 has caused unprecedented disruptions to SMEs across Australia. For accounting practices this has impacted the value of goodwill - but how and how much this affects practice value and the sale process is still an open question.

Some practitioners are comfortable with the assumption that they will continue working until the end of their life, what might be considered the 'die at your desk' model. Fair enough, but there are big problems if you arrive at this position by default.

Appointing a new equity partner can be an effective way to underpin the continued growth of a firm, particularly when they bring an existing fee base with them. This can mean increased profitability, increased stability or increased problems, if you do not pay attention to the terms.

In the first quarter of 2020 we've seen a material increase in enquiry from vendors of small financial planning books seeking to sell. And it's not just Covid-19 or FASEA driving this trend.

Succession can take many forms depending on your situation and goals. Considering a merger can give you options beyond a simple all-or-nothing sale.

One of the benefits of having a tech team working alongside our brokering unit is the ability to draw data from our M&A platform to identify trends. We’ve been developing data prospecting tools to help us build a Buyer Index for the accounting industry.

It's a mostly acknowledged truth that the pace of Australian corporate world tends to shift following Melbourne Cup day. It comes much later for accountants who, defined by lodgement deadlines, tend to soldier on well into December whereupon things tend to stop completely.

You love what you do, and you're good at it. So why should you just stop? Perhaps you shouldn't.

Embracing technological change is always a challenge, particularly in the field of accounting. How can you keep ahead of the curve without adding even more to your professional education workload?

Ever since we commenced selling accounting practices in 2001 the normal range of price for accounting fee parcels hasn't varied much from where it sits today which is 70 cent to $1.10 of expected recurring turnover.

A long weekend is a welcome break from the weekly routine, a chance to rejuvenate and reconnect with family. Maybe a short trip away from home, fishing trip, weekender or just a chance to put your feet up and forget the schedule for a day. What if this were the norm, not the exception?

There are many pathways to succession. Many practitioners in the accounting space are choosing to broaden their succession options by appointing an equity partner. But how do you find the right one?

With the pending FASEA requirements and predicted changes as a result of the Hayne Royal Commission into the Financial Services industry we are certain to see planners exiting the industry in increasing numbers. Should you go? And if so, when?

When I bring up the topic of succession with accountants there is a common theme: "I want to improve my work/life balance and maybe take some equity off the table, but I don't want to retire yet."

One of the most disappointing things I see is when an overworked practitioner writes to some of their long-time clients to say that they can't represent them anymore. It's the business goodwill equivalent to burning cash.

In response to an increasingly competitive marketplace many Financial Planning firms are bundling an accounting service to make it easier to attract and retain clients.

Now that the Financial Services Royal Commission final report has been handed down one thing is clear - the way Financial Planning and Insurance Businesses are traded in the market place will change.