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What to consider before selling your FS business

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​The current climate is a turbulent one. While such an environment has fostered doubt for some on the future and selling-power of their businesses, PwC note: “inflation, continued geopolitical turbulence and high interest rates are pressuring margins for some companies. But the flip side is opportunities for companies to make high-impact acquisitions and divestitures” (PWC: US deals 2023 midyear outlook). Though there are a number of environmentals that could undermine the confidence of a business owner looking to sell, the fact remains that the main aspects dictating a ‘bad’ time to sell are primarily things under your directorial control.

Going to market before the time is right can have a detrimental effect to the acquisition strategy and scope for interest. Much like selling a car or a property, there is a requisite process of care and maintenance (such as ensuring cleanliness and an absence of defects) before it can be listed on the market. Similarly, practical aspects of maintenance such as upkeeping your log book and service history can have a real impact on ascertaining not just the value, but also the attractiveness of a business.

A polished, well-serviced, low mileage vehicle is more likely to attract a greater volume of interest, buyers and price; these same metrics can be applied to selling your Wealth Management business, but they shouldn’t be at the expense of taking your business to market at the right time. Here are five considerations to make your business more attractive in the market:

Insight into your business operation, including performance, strategy, market position and growth opportunity

Having both a clear view of what the future holds for your company, as well as a strategy for how to get there is fundamental. The value isn’t solely found in the business as it is but also in what it could be. It’s important not to rely on prospective buyers to have their own ideas of what the future of your business looks like; nothing sells like a clear vision. One idea for implementing this is collecting and utilising past data to project future performance, as well as optimising a clear strategy for growth.

Do you have sustainable and consistent new client income streams or what diversification opportunities are available to your existing clients?

Linking to the above, directors should ensure that the business they look to sell is equipped to be profitable in the short term. Slow investments are a hard sell; compile a marketable list of new client income streams, as this will be your main selling point. Much like car dealerships providing merchandise with filled tanks, demonstrating evidence of either a consistent new client income stream or various diversification opportunities, is evidence to prospective buyers that they’ll be immediately on the road to profits once the deal is made.

Look for weaknesses, risks, threats and opportunities and explore how they can be addressed.

Accurately assessing business risk, threats and weaknesses as well as opportunities, is too sizeable a task for any one individual, let alone one preoccupied with the daily running and potential sale of a dynamic business. McKinsey therefore advise companies to “tap into people with the right skills and knowledge in real time, convening cross-functional teams and authorizing them to make rapid decisions in running the business, innovating, and managing risk” (McKinsey: Meeting the future: dynamic risk management for uncertain times). Encouraging multiple qualified eyes and minds on risk assessment ensures any weaknesses that could undermine the value of a business are taken care of. In addition to this, once any potential hurdles are managed, opportunities for growth come through.

Is your value proposition clear to shareholders, employees and clients?

While a strong mission statement and growth strategy is synonymous with a high-value business, it’s important to remember that a key aspect of a business’s value are the people responsible for its continuing operation and efficiency.

Maintaining transparency throughout the period of sale is paramount if employers want to retain the workforce responsible for the success of the company, “research shows that a human-centric approach, which provides people with more control over their work and work environment, also makes them more productive” (Garter: Employees seek personal value and purpose at work. Be prepared to deliver). Understanding when the best time to notify shareholders and employees of impending change isn’t always clear; employers may choose to notify the workforce of intent to sell, or even wait till a deal has been made. Regardless, it’s important not to leave people in the dark.

Have you consulted with an M&A Broker to gain market insight, buyer options and the specific considerations that are unique to you and your business?

Following on from the above, consulting an M&A Broker alleviates not only the headache of understanding what protocols are applicable for a successful sale, but also knowing when to enact specifics. While certain rules on selling a business are all-encompassing and applicable by law, the minutiae of when to tell what and to whom is specific to the culture and running of the organisation being sold. Should this be done wrong, relationships can be jeopardised, ultimately impacting the value of the business.

M&A Brokers are therefore an invaluable tool for understanding how best to begin the process of selling your business, as they can tailor their advice to you and your company, ensuring a seamless transition and maximal returns for all.

“Our job is to make sure we carve out the best possible route for employers looking to sell their business. The internet is awash with contradictory advice on the best course of action and, confusingly, a lot of it can be applicable -but we come in to narrow down what’s ultimately best for you.” [James Salmon, Business Manager, Financial Services Mergers and Acquisitions]

Whilst not exhaustive, these considerations can help build the foundations of the bigger picture and are often all that’s required to initiate discussion. As a business owner, it’s important not to allow the stress of navigating the sale of your company to cloud your sight of trajectory and growth opportunities. Gain an informed, tailored perspective by hosting a discussion around the market and the different pathways available.

Get in touch with James Salmon at IDEX Consulting.


Garter: Employees seek personal value and purpose at work. Be prepared to deliver

McKinsey: Meeting the future: dynamic risk management for uncertain times

PWC: US deals 2023 midyear outlook