What are the common misconceptions when selling a financial adviser business?

As with any industry, there are a number of misconceptions when it comes to selling an independent financial adviser business. Whether it’s a lack of knowledge or simple misunderstandings, these misconceptions can be damaging to both the seller and potential buyers. As stated in Unbiased: “A planned exit will always be preferable to one that is forced on you by circumstances. Planning lets you choose the means by which you leave, and also to groom the business for that specific strategy”* so understanding the misconceptions can help you with your planning.

One common misconception is that selling the business is a quick and easy process. While it’s true that some sales can be completed relatively quickly, this is far from the case for every business. A successful sale requires careful planning, thorough market research, and the right buyer. This can take time, and should not be rushed. 

Another common misconception is that the value of the business is based solely on its profits. While profit is certainly an important factor, there are many other elements that affect the value of a business, such as its reputation, client base, intellectual property, and future growth prospects. A buyer will look at these factors, as well as many others, before making an offer.

Some people also have the misconception that it’s easy to find a buyer. While there may be a number of interested parties when a business is put up for sale, finding the right one can be a challenge. A buyer who is a good fit for the business and its values is much more likely to ensure a smooth transition and continued success for the business.

Additionally, some may assume that selling means completely walking away from the industry. However, this is not always the case. Many sellers are willing to stay on for a period of time as part of the sale agreement, in order to ensure a smooth transition and to help build relationships with new clients.

Finally, there is a misconception that selling means losing control of its direction. This is not necessarily true. A seller can work with the buyer to ensure that the business continues to operate in the way they envision, and can also maintain some level of involvement in the business moving forward.

In conclusion, while there are certainly misconceptions surrounding the sale of an independent financial adviser business, sellers can avoid potential pitfalls by being well-informed and working closely with the right buyer. With the right approach, a successful sale can be achieved, resulting in a bright future for both the business and its new owner.

* https://www.unbiased.co.uk/discover/tax-business/running-a-business/exit-planning-guide#why-exit