NOTE: I would like to thank guest blogger Kevin Condon for Part 2 of this insightful blog. While he writes to owners of financial planning practices, his wisdom is equally applicable to any business owner considering buying or selling a business. Click HERE for Part 1. – JH
To maximize value in transferring a practice to new ownership, plan to strengthen your brand as you do so. If the firm grows and improves at the same time, clients will stay, sellers with maximize their profits and buyers will revel in their good fortune. The good deal is the one that works for all. Here are a few concepts to help that happen.
Don’t Change the Name of the Transferring Firm
- Don’t change the name of the transferring firm if you can help it. If you have to, change it gradually. If the firm carries the name of the departing partner, make a three step change through graphics with photo inclusion of new partners in all communications. Keep the old ownership senior in images, but increase the new owner’s presence–gradually. Also avoid an abrupt change in the tone or identity of the firm.
Ensure Old Clients are Comfortable with Transitions
- Make sure that old clients are comfortable with any transition. Take the time to bring the new owner into visibility in the practice and during client meetings in a manner that is both expected and appreciated. The introduced new blood should be announced as a step up in quality and service. Incrementally, the outgoing owner should not dominate as much, but should spend a lot of time:
- introducing and adjusting the firm’s clients to new personnel,
- assuring clients that newly added people are trusted and admired and
- helping establish that the new blood will add another level of care, service and enhanced quality to the firm and its best clients.
Show clients by what you do, not just by what you say! Give the buying owners an important and increasing role in client meetings, always reassuring and praising them as colleagues–not young pups or junior members–while showing clients that your steady hand is still protecting, monitoring and improving the firm.
Cultivate Client Trust that You Will Improve Service Performance
- Cultivate clients to trust you to improve their service and your firm with new blood through incrementally added thoughtful new ideas and practices. No one likes change, so instead of worrying your clients and their heirs, emphasize how you are reinvigorating the firm for the future.
Effective Sellers are Humble
- Sellers should be humble in any transition. More practitioners go down with their ship than make a successful transition. Buyers are scared of sellers’ ability to perform in transfers. Why? Because the hard charger that builds good firms is often not able to sell the improvements that the new ownership brings.
Both buyer and seller have a sale to make. They have to show to their clients that staying in place is the wisest, safest and obviously best decision for their family’s health and wealth.
Old clients need to be resold,
not merely closed.
For the firm’s A clients, you may want to use a special social client dinner occasion, inviting spouses and key family members. Especially involve family members for elderly clients. The heirs may not know how valuable the continuity and detailed service is for “Dad’s” finances. It is very important the whole family stay secure in the wisdom and continuity of management in the services you perform.
So, in sum, the goal for both the buyer and seller is to improve the firm by strengthening its brand with a perceived step-up in quality which is enthusiastically approved and supported by existing clients. Any other approach will leak value. Cultivate increased client loyalty while keeping next-generation heirs comfortable. The best transition for buyers, sellers, clients and their heirs is the one based on increasing value and great service for existing and new clients.Don’t damage the asset in the center of your life; heighten its value and improve your brand while you morph into the best firm in your market.
About Kevin Condon
A veteran of the financial planning profession since 1984, Kevin Condon built and sold a successful AUM/tax/planning practice in Maryland to his partners in 2002. Then, he built a “bleeding-edge” national online registered investment advisory firm by developing the technology, services, and advice products required by large employers and online advice consumers.
A PhD and retired Certified Financial Planning practitioner, Kevin is an Associate of JH&A who currently does online employee benefits financial education sessions through Financial Knowledge Network and volunteers in Colorado state prisons thorough Kairos (https://kairoscolorado.org/) for fun.
