What is your advice business worth? While this is a question you would certainly ask a business owner who walked in your door as a client, this is a question many financial advisers tend to put off, regarding their own business.
When financial advisers get around to addressing the issue of their business’s value, it is often when an opportunity to sell presents itself or when you begin to consider taking on a partner—and that’s often too late.
We believe it is critical for you to conduct a routine due diligence of your business which examines its appeal as a saleable enterprise – this needs to be done whilst you still have time to make changes. If you are considering selling your advice business, it is best to start meeting with a valuation expert 3-5 years in advance. This is because you will need to know what to do to get the business ready for a sale. Both the tangible and the intangible should be documented.
Here is what your valuation action list may look like:
- Get audited financial statements
- Organize articles of incorporation, partnership agreements and get legal documents in order
- Record board minutes
- Check that your trademark is registered
- Ensure that service agreements and fee disclosures with clients are up to date
- Develop a list of clients, individuals and small businesses with revenue generated from them over the years
- Ensure all client records are audited and signed off by your compliance consultant
- Sign employees to employment agreements
When it comes to business valuations you should take the advice you give to your own clients. Plan in advance and take the time to implement and monitor it.
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