10 Important Questions to Help Buyers Develop Objectives, Strategy and Expectations
1. What type of practice will fit my current business framework or will allow me to expand into a framework that I currently don’t have?
2. What type of firm should I seek, a commission –based firm, fee-based firm or a fee-only firm?
3. What type of client base will best fit my firm and the products and the services I intent to offer? Is it mostly mature investors focused on retirement planning, small-business owners, high-level executives, or clients who are the accumulation phase and seeking mostly asset management services?
4. Should I target middle-income or a high-net- worth client?
5. How many clients can I properly service under my current and acquired framework? Am I truly prepared to service the increased number of clients, especially early in the transition phase?
6. What down payment or buy-in can I afford? What financing arrangement is the best fit for my circumstances: an earn-out, installment note, promissory note, or a situation in which I can grow my income within a firm and then acquire ownership over time? Investigate all these possibilities.
7. Should I seek only those buying opportunities within my broker-dealer to minimize client attrition and to assure a seamless transition? Or should I seek to work with NEXT recruiting to acquire a firm that could be brought into our broker-dealer?
8. Do I want to limit my search within a local area or expand my search into outlying areas, even another state? Do I want a second branch office or will my circumstances require that I incorporate any acquired clientele into my current operations?
9. If acquiring a book of business, will I need to hire additional help to properly service the increased client base? If acquiring a business, will I need to keep the firm’s current employees? Do I want the current owners to stay on as part of the practice and, if so, for how long and under what conditions?
10. What terms are most favorable in my acquisition? Should I prepare to use employment agreements for the staff and a flexible consulting agreement with the seller?